Payment Guarantee

DONE

Similar to Performance Bond Guarantees, a payment guarantee is the other way round wherein the supplier or the developer wants to make sure that he receives his payment at the end of the job. In other words he does not trust the person for whom he has undertaken the job and wants a payment guarantee to be provided by the other party.

Again in this type of guarantee, the beneficiary can encash this guarantee if payment is not made after completion of the job. Proof has to be provided in terms of unpaid invoices or any document that proves that payment has not been made even though the required job has been done. Bank is liable to make
payment within 2 working days on receipt of notice from the beneficiary along with supporting documents.

On receipt of the request, if the guarantee was issued against a security, the Bank will utilize the security to pay the guarantee amount to the beneficiary and will inform the customer to its customer. Incase of a dispute wherein customer claims that payment has been made but a fraud is being committed by the beneficiary, Banks request the customer to take the matter forward with relevant legal authorities as it will be a dispute between both parties. Payment will be made by the Bank as per their terms and conditions and as per their internal process but payment of a guarantee will not be stopped due to their customers request.

If the guarantee was issued as an unsecured guarantee without taking any kind of security from the customer, the amount will be paid by the Bank and then they will followup with the customer to get the amount of guarantee back.

Payment guarantees as mentioned earlier are requested by suppliers or contractors wherein they want the payment to be secured.