A guarantee is a security instrument by which the issuing bank, at the request of the client, undertakes an irrevocable obligation to pay the guaranteed amount to the beneficiary of the guarantee upon request, as compensation for non-payment or inaction by the principal, for whom the bank will pay the obligation.

There are different types of guarantees, such as:

• Customs guarantee
• Advance refund guarantee
• Bidding or tender guarantee
• A guarantee for good performance
• Guarantee for payment security
• Loan repayment guarantee etc.

Benefits for the user:

• In all its forms, the guarantee provides security to the user that he will receive compensation from the bank for any non-payment or inaction on the part of his contractual partner.

Advantages for the client:

• By using the name of his bank, the principal secures a better position and better negotiating terms, and is also protected against the carelessness of the beneficiary.