Financial Bank Guarantee is a bond which is not cancel able and ensures the payment of the interest by the borrower. 

  1. A financial guarantees is issued by the banks purely for monitory obligation of its customers. For example guarantee is given to meet obligation of contractor to deposit earnest money to grab the contract and /or in View of security deposit and/or guarantees required to be given to tax authorities in respect of disputed tax liabilities.

  2. Basically financial guarantees is issued to ensure that the person on whose behalf guarantee is issued full-fill his promise or discharge his liabilities as per the terms and condition of contract. In case the promise is not full-filled the beneficiary will invoke the guarantee from the issuing bank.

  3. There are three parties in the guarantee.

    Applicant--- Who need the guarantee to be issued by the bank for submission to the beneficiary

    Issuing bank-- The bank who accept the request to issue the guarantee on behalf of the applicant /customer who enjoy a good reputation for full-filling his commitment.

    Beneficiary-- Is the person in whose favour guarantee is issued as need a bank guarantee to be assured that if the applicant fail in discharging his monitory obligation, he will get h money guaranteed by the bank by invocation of bank guarantee.

  4. It is important to note the following points.

    1] Generally banks require margin of 25% by way fixed deposit or cash deposit in margin money account/earmarking the amount in current account as margin.

    2] The balance unsecured portion need to be covered by collateral security.

    3] Amount of bank guarantee must be specific. Like wise period of bank guarantee should be also specific. If the claim period is mentioned separately in underlying contract than the bank guarantee should also have a clause for claim period.

    4] Generally bank guarantees are issued for three year or less and if the same is required to be extended, it can be done at sole description of the bank. However if there is change in terms and condition of original guarantee bond, the same has to be issued a fresh.

  5. Bank guarantee is a most convenient credit facility which allow the borrower to use his liquid funds in his business and give a guarantee bond for mobilization of advance from concern dept/or giving security deposit/or making payment for disputed liabilities. Period of financial guarantee is generally over with the completion of work and discharging monitory obligation by the applicant.

  6. arrange for sanction of bank guarantee limits for customers who require the bank guarantee regularly for conduct of their business smoothly and also for the customers who need the bank guarantee one time or occasionally. 

The borrower and/or the guarantors have to provide the following documents to the banks or the lending institutions while submitting Financial Bank Guarantee Application. Certain documents may be demanded by the bank or the lending institutions in post sanction phase or on periodical basis.

  1. Address Proof : Latest Electricity/Telephone Bill or Receipt of Maintenance Charges or Valid Passport or Voter?s Identity Card or Purchase/Lease Deed/ Leave & License Agreement of Residence or Office Premises.
  2. Identity Proof : Valid Passport, PAN Card, Voter?s Card, Any other photo identification issued by Government Agencies.
  3. Business Proof : VAT/CST Registration No. or MIDC Agreement or SSI Permanent Registration Certificate or Warehouse Receipts or Shop & Establishment Act Certificate or Copy of Lease Agreement along with the latest Rent paid Receipt.
  4. Business Profile on Company?s Letterhead.
  5. Partnership deed in case of partnership firms.
  6. Certificate of incorporation, Date of Commencement of Business and Memorandum of Title Deeds, Form 32 in for Addition or Deletion of Directors in case of companies.
  7. Last three years Trading, Profit & Loss A/c. and Balance Sheets (duly signed by a Chartered Accountant wherever applicable).
  8. Last one years? Bank statement of the Firm.
  9. If existing loan, then sanctioning letter and repayment schedule of the same.
  10. Firm/Company?s PAN Cards.
  11. Individual Income Tax Returns of the Individual/Partners/Directors for last three years.
  12. Last one years? Bank statement of Individuals, Partners, Directors.
  13. SEBI formalities in case of listed companies.
  14. Share Holding pattern of Directors duly certified by a Chartered Accountant.
  15. List of the Existing Directors of the company from the Registrar of the Companies.
  16. Written & approved confirmation of having No Legal Suit filed against any of the directors. If any such legal suit or proceedings are pending then the details of such legal suit or proceeding.

In India there are many Bank Lenders who provide Home Loan / Housing Loan.

Process of this bank / lender is same.

  1. Application form is login.
  2. Personal Discussion is done by bank officer with customer.
  3. Bank's Field Investigation (All documents are Verify by bank which given with application form).
  4. Bank cheques CIBIL report.
  5. Sanction Letter.
  6. Signing of agreements and submitting post-dated cheques.
  7. Disbursement.