• This is an Off Balance Sheet financing arrangement where bank issues guarantee to a third party at the request of the customer (applicant)
  • Maximum tenor is 365 days
  • Guarantees can be in the form of: Bid Guarantee, Advance Payment Guarantee, Performance Guarantee, Letter of Undertaking etc


  • It enables the customer to engage in undertakings which require such guarantees, hence make more business
  • It is economically cheaper compared to other facilities e.g. Bank Overdraft


  • Customer creditworthiness will be analyzed under the same criterion and consideration discussed under Corporate Overdraft, taking into consideration the nature of a particular Guarantee