Bharti AXA INSURANCE GLOSSARY Bank Guarantee Bank Guarantee A bank guarantee is a promise from a lending institution, including a bank, to pay the debt owed to a third party in case the borrower (customer) defaults on the same. As the definition of a bank guarantee is broad, it can be used in many different circumstances: A payment guarantee assures that the purchase price will be paid by a set date An advance payment guarantee assures a buyer that the advance would be refunded if the product/service is not delivered by a set date A rental guarantee assures the third party that the rent would be paid by a set date A performance guarantee refunds a buyer’s costs if the seller fails to perform as per the contract between the parties. As shown by the examples above, a bank guarantee is an agreement between at least three parties – a lending institute, an applicant who seeks guarantee and a beneficiary who takes the guarantee. A bank guarantee is used to add to the credit worthiness of the applicant, ensures that the business has been assessed by an independent third party, and reduces the risk for both the applicant and the beneficiary. A valid bank guarantee has the following features: A clearly specified period for which the guarantee holds A specific amount that the guarantee is offered for A clearly stated purpose of the guarantee A grace period to enforce the guaranteed rights The events under which the guarantee is enforces is clearly stated Request Call Back Category * - Select -CarTwo WheelerHealthTravelPersonal Accident Buy Renew Claim submit Related Posts Disclaimer : The information published on this website is for the public's reference only. Content of this information is to provide an overview of your Travel needs and should not be relied upon for personal, medical, legal or financial decisions and you should consult an appropriate professional for specific advice. Bharti AXA General Insurance Company Limited makes no representations about the suitability, reliability, timeliness, and accuracy of the information, travel, services, or any other items mentioned on this subject for any purpose whatsoever.