A Bank Guarantee is an irrevocable undertaking issued by the guarantor (bank), upon instructions or request of the principal (applicant or bidder or performer) to pay the beneficiary any sum that may be demanded by that beneficiary up to a maximum amount determined in the guarantee, upon presentation of a demand conforming with the terms of the guarantee.
Siddhartha Bank Ltd. on behalf of its customers issues various types of guarantees in favor of beneficiaries domestic and abroad.
Contracts are awarded generally through the process of bidding. Usually, notice of tender is published in newspapers where the beneficiary ask every bidder either to deposit an earnest money, which is normally 2 to 10% of the bidding amount, or to present a bank guarantee of a reputed bank for the same amount. Beneficiary uses that guarantee as a security in case the bidder refuses to accept the contract. A bank guarantee designed to serve that purpose is a Bid Bond. Our Bid Bonds are widely accepted by national and international organizations.
A bank guarantee issued to the beneficiary to ensure the performance of the bidder is a Performance Bond. Once a contract is awarded to a bidder, he/she has to perform the specified job as per the terms and conditions mentioned by the beneficiary in the contract. To be assured of the bidder's performance, the beneficiary requires a bank guarantee from the bidder. If the bidder fails to perform as per the terms and conditions of the contract, the beneficiary can invoke the guarantee and claim the stated amount from the guarantee-issuing bank.
We issue Performance Bond at a competive rate.
ADVANCE PAYMENT GUARANTEE
A bank guarantee issued to the beneficiary to ensure the amount paid in advance to the performing party is an Advance Payment Guarantee (APG). After a contract is awarded and the performing party requires certain amount in advance from the beneficiary to initiate the job, the beneficiary makes the payment by obtaining an APG. If the amount paid in advance is misused or the performing party fails to comply with the terms and conditions, the beneficiary will invoke the guarantee and claim the stated amount from the guarantee-issuing bank.
SHIPPING INDEMNITY BOND
In case of import LC, if goods arrive at destination port prior to the original documents, then port authority and shipping company will not release the goods. In order to release the documents without original bill of lading, they require a guarantee from the bank. Such guarantee is Shipping Indemnity Bond. Once the LC issuing bank receives the original bill of lading, it will be submitted to the shipping company and the guarantee is released.
SOME USEFUL SITES FOR TRADE SERVICES ARE:
www.icc.org (International Chamber of Commerce)
www.nrb.org.np (Nepal Rastra Bank)