Tender Bond Guarantee

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Again as the name suggests such guarantees are requested by companies who are issuing a tender and wants interested parties to provide a tender bond guarantee with the required documents and to complete the formalities provided.

Generally, these kind of guarantees are required by customer to be issued on a short notice as the number of days provided by the company to complete the requirements are really less and the documents along with the tender bond guarantee will have to be submitted in a sealed envelope as per the companies requirements.

If the tender is accepted, the guarantee is encashed and further requirements are provided to the company and the request will be taken forward but incase the tender submitted is rejected
, the guarantee issued by the company is returned and the same can be submitted to the Bank for cancellation.

Once the original guarantee is received back by the Bank, the outstanding guarantee is cancelled and the margin placed on hold is released if the margin was only placed for this guarantee, else the amount available to customer to request for guarantees (limit approved for the customer) is increased and the customer can avail this amount to request for any other guarantee which may or may be a tender bond guarantee.

Generally their are no charges for cancellation of a guarantee but some banks may charge cancellation charges as per their tariff which is published on their website. The charge or the guarantee commission charged by Banks is never a fixed amount but a percentage of the guarantee value or an amount which ever is higher. It is advisable for customer to review few Bank's websites before deciding on the Bank as charges may be less in some Banks that are in need of trade finance business.