Shipping Guarantee

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A shipping guarantee as the name suggests and like other guarantees provided by Banks is a guarantee issued by the Bank to guarantee payment to the shipping company incase the customer fails to pay.

Banks usually do not deal in the physical goods but deal in the documents as Banks do not have control or the resources to physically check the description and the actual goods. In this kind of guarantee, customers can take possession of goods before the original bill of lading reaches the shipping company. Bank agrees to pay the shipping company incase of loss i.e if the customer fails to make payment for the shipment, Bank agrees to pay the shipping charges to the shipping company.

These are generally issued against cash margin and rarely are unsecured unless the customer has a really good relation with the Bank with a clean Credit History. The amount of guarantee to be issued is deposited by the customer in his account along with required charges and the guarantee is issued in favor of the shipping company.

Details of charges levied by Banks will be made available by majority of Banks on their website and is also available in their branches wherein the customer would be required to visit in order to complete the documentary requirements. Once the issuance of guarantee is approved by the Bank (all requests submitted to the Bank are subject to Banks approval), the charges are debited to customers account along with the guarantee amount which will be placed separately in a margin account and guarantee in original will be issued to customer.

Guarantee can be issued as an ongoing guarantee which can be used for future shipments or can be issued with an expiry date wherein the guarantee and the confirmation provided by Banks to pay the required amount stands null and void once the guarantee expires.