Bank guarantees or letters of guarantee Know the letter of guarantee or bank guarantee is a written undertaking by a Bank, usually at the request of the client for the benefit of the beneficiary, the bank undertakes to pay a specific value within the limits of the amount specified in the letter to the beneficiary upon the first request, regardless of any objection by the customer, provided that prompted by the duration of the letter of guarantee, but fell right of the beneficiary bank's claim.

The guarantees of credit facilities, are accidental (potential) obligation to the Bank, the bank charges a Commission on the issue, but the non-performance of the contract which the guarantee was issued for its implementation, the Bank may suffer losses, the Bank in the event of a breach of the contract with the beneficiary of the guarantee, the Bank pay to the beneficiary, at the request of the beneficiary, and unconditionally, and the value of the bond in this case to the loan to the customer.

Contribute to guarantees in economic development, the release helps implement contracting, without freezing the contractor part of its capital as a guarantee for the implementation of the enterprise and used as an alternative to providing cash deposits in the case of participation in tenders, supply contracts, etc., may issue letters of guarantee in local currency or foreign currency.

Elements of the letter of guarantee: Guarantee or letter of guarantee includes the following elements: Guarantor (sponsor) Bank: the Bank that issued the letter of guarantee. Content (guaranteed): the client who requested the issuance of the letter of guarantee. Beneficiary: the person or entity that issued the letter of guarantee.

Amount: the maximum value of the bond that must be paid by the Bank to the beneficiary upon request in the event of a breach of its obligations secured. The purpose of the warranty: usually the implementation of a business or other purposes, as shown when talking about the types of guarantees. Expiry date of the warranty: usually the same as the end date of the project, which issued the bond.

Types of guarantees: Banks issued different types of warranties vary according to the purpose of the main types of guarantees: Primary bid bond guarantee: the guarantee issued by the Bank, at the request of the customer for submission to official bodies or ministries when they participate in the tenders, and the letter of guarantee is the primary substitute for money that can be requested by ministries or departments.

The objective of this type of guarantees is to ensure serious applicants for these tenders, the value of these guarantees vary between 1_10% of the value of the tender. This warranty expires, when the Messenger of tender on a particular contractor. Where the primary guarantees of returned no virus they tender who had applied for the tender. And the primary guarantee expires for those awarded by tender, when signing the contract, and submit a final letter of guarantee.

The final letter: and also ensure proper implementation, issued at the request of the customer to whom the tender was awarded, for submission to the employer, to ensure their rights, and ensure that the first contractor to contractor to implement the terms of the contract in terms of specification, quality and implementation date, and the end of the agreed time

Decreasing: the letter of guarantee or a letter of guarantee issued by a Bank for prepayment customers from contractors, to obtain payment from the employer to implement tadathm, decreasing the value of the bond with the work by contractors, based on documents signed by the employer, which issued the bond.

Payment: guarantees are issued to ensure fees or fines in case of a breach of certain conditions (to the customs authority or any other party) Guarantees a certain profession: This guarantees requested, in the case of appointment of a staff member in the Bank or in the establishment, as a cashier in a Bank, an insurance company, which asked the insurance company represented by ensuring to do the work of the Agency, and the Office of tourism and other bailouts.

Guarantees requested by the Customs Department for specific purposes: such as: permit the passage of goods through the territory of the State, and then reformatted the request to ensure the owner of the goods, so they sell them in the territory of the State, without paying the required customs. And ensure that the clearance of the goods, if the arrival of the goods, prior to receipt of the documents.

The practical procedures for the issuance of letters of guarantee : In the case of a request letter, sends the request to the Vibrio section current accounts, to confirm the existence of a current account of the client for restriction value and charges on this account, and compare the value of the letter of guarantee or a certain percentage of the agreement as deposit, in addition to banks. If his current account, counting sample client letter value and supply banks to the Treasury, and the customer gets a copy of the notice to the supply of cash ' and send another copy to the Department of letters of guarantee.

After the deposit of the agreed amount, the letter of guarantee is issued from multiple copies. Send copy 1 of the worksheet. Or receipt of the letter of guarantee, signed a letter of guarantee for the benefit received to the letter of guarantee. Send a picture to the General management of the branches, so the sequence of the letters of guarantee from bank branches.

Opens a file for the letter of guarantee which shall be deposited with the following documents: Request letter. A copy of the letter of guarantee. C a copy of all notices of the constraint on the customer account (called the letter of guarantee). D. A copy of all correspondence, and will be in the future.

Expiry of the guarantee (warranty). Ends for bail returned to the Bank, because of the commitment, or because the end of the term without receipt of claim. Letter of guarantee expires in the following cases

End of warranty period without refund of any payment by the Bank. If the beneficiary of the letter of guarantee to the Bank before the end of its duration. If the bank payment letter of guarantee to the beneficiary before the end of the period.

If a new letter of guarantee rather than the original because no changes have occurred in the letter of guarantee, a guarantee of the Bank. After the end of the letter of guarantee, without paying the Bank the value of the beneficiary's Bank to return the value of insurance paid by the customer for a letter of guarantee, after deduction of the expenses it deserves.