Advance Payment Guarantee

The objective of this type of guarantee is to secure the funds, paid by the beneficiary (Government Organization and Institutions, Corporations, Companies etc.) to the contractor, before start of the job, or in the process of the job, to strengthen the financial position of the contractor for speeding up the progress of work. The beneficiary will take steps to re-collect the funds paid by en-cashing the Guarantee, in case of the contractor’s failure to meet his commitments. These guarantees are issued by the Bank, in favour of the beneficiary, at the request of the contractor.

These are required for a fixed percentage of the total amount of the contactor that the beneficiary is expected to pay to the contractor in the form of advance payments. The funds, paid by the beneficiary to the contractor, are deducted from the job position reports at various stages in such a manner that before the last temporary/partially job position report is filed in, the said amount should have been amortized.

According to the general terms of the contract, the amount of the guarantee is also reduced each time upto the amount of the deductions, on the basis of the beneficiaries’ declaration, and the guarantee is released, with the consent of the beneficiary, at the latest, by the date of the temporary/partially hand-over of the job.