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What happens when a bank guarantee expires? If the BG is not invoked within the expiry period and the original BG is not returned, banks forward registered letters to the beneficiary to get the original BG. if no response, it gets canceled and the margin money provided by the applicant is released.
A bank guarantee is essentially a promissory provision on a loan indicating that if the borrower of the loan defaults on repayment, the bank will cover the amount of default. This is a crucial provision to convince multiple companies to work together to complete a long-term project.
As per this act, Bank Guarantees must have a limitation period, and the claims can be made on them only within this period. Usually, the limitation period for Bank Guarantees in India is 12 months over an above Expiry date of bank Guarantee If a claim is not filed on a Bank Guarantee within this period, it expires.
Under a bank guarantee, if the buyer is unable to make the payment to the seller or creditor, then the bank pays the fixed amount to the seller as the obligations of the contract are not met. On the other hand, under a letter of credit, the bank makes the payment to the seller once he or she delivers.
It is the valid period to file a suit in a court against the Bank if any dispute exists. After the happening of a specific event [Ex. Bank denied encashing the BG, the Bank has not paid encashed amount, etc.] the Beneficiary can approach the court within one year from the date of the incident.
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A bank guarantee is a promise by a lending institution to cover a loss if a business transaction doesnt unfold as planned. The buyer receives compensation if a party doesnt deliver goods or services as agreed or fulfill contractual obligations.
Some of the agencies like Coastal Aquaculture Authority (CAA),and Department of Fisheries and Local Administration in different States and Union Territories, Ministry of Environment and Forest and Ministry of Agriculture have guidelines for aquaculture and the same can be accessed through their websites.

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