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The document outlines the format for a Bank Guarantee required by the Government e Marketplace (GeM) from sellers for contracts exceeding INR 30 Lakhs. It specifies the obligations of the seller to pay transaction charges within 21 days of receiving an invoice, and details the conditions under which the bank guarantee can be invoked if these charges are not paid. The document includes sections for beneficiary information, guarantee amount, validity period, and liability limits.

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What is the standard wording for bank guarantee?

On behalf of the Principal, we, the undersigned, hereby irrevocably and unconditionally undertake to pay to the Beneficiary any amount up to the Aggregate Maximum Guaranteed Amount upon his first demand in writing, waiving all rights of objections and defense arising from the Principal, provided that such claim

What is the difference between a letter of credit and bankers acceptance?

A letter of credit is a financial instrument that a bank issues for a buyer (the bank client) guaranteeing that a seller will be paid. A bankers acceptance, on the other hand, guarantees that the bank will pay for a future transaction, rather than the individual account holder.

What is the difference between a bank guarantee and a standby LC?

A standby letter of credit is frequently used in long-term contracts to give the beneficiary payment security in ance with the terms and circumstances of the contract. In contrast, bank guarantee services have a broader use because they are employed in both long-term and short-term transactions.

What is BG used for?

Uses of Bank Guarantee Predominantly used in the purchase and sale of goods on credit basis, where the seller is assured of payment from the bank in case of default by the buyer. Helps in certifying the credibility of individuals, which in turn, enables them in obtaining loans and also assists in business activities.

Which is better, LC or BG?

Nature of guarantee: A bank guarantee provides a safety net for losses, whereas a letter of credit assures payment upon fulfilling specific conditions. Usage: Bank guarantees are often used in contracts as a performance safety, whereas letters of credit are primarily used in trade finance to ensure payment for goods.

How to write a bank guarantee?

We, (name address of bank)(hereinafter referred to as the Bank) at the request of (name of company) do hereby undertake to pay to the Government an amount not exceeding (amount) against any loss or damage caused to or suffered or would be caused to or suffered by the Government by reason of any breach by the said

What is the difference between inland LC and BG?

Letters of credit are also financial promises on behalf of one party in a transaction and are especially significant in international trade. Bank guarantees are often used in real estate contracts and infrastructure projects, while letters of credit are primarily used in global transactions.

What is the biggest advantage of using a letter of credit system?

It helps sellers manage their cash flow Aside from guaranteeing payment, a LC ensures payment arrives on time. This is particularly important if there is a significant time lag between the delivery of goods and payment especially in the event of deferred payment.

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