letter of credit<\/a>. However, one should understand that both are pretty different.<\/p>\nA bank guarantee<\/b> refers to a commercial or financial instrument that is provided by a bank, where the bank assures or guarantees a beneficiary that it will make the payment to the bank in case the actual customer fails to meet his or her obligations. The bank will pay on behalf of the customer who requests for a bank guarantee.<\/p>\n
On the other hand, a letter of credit<\/b> refers to a promise or commitment in writing made by a bank or any other financial institution or corporation to a particular seller that payment will be made to the seller if the seller completes performing whatever is mentioned in the letter of credit. For the bank to make the payment on behalf of the original buyer, there should be a documentary proof that the seller has completed the transaction accurately by delivering the right product or service on time. The seller will get a guarantee from the bank that the seller will definitely pay the amount on behalf of the original buyer once the obligations are fulfilled.<\/p>\n
Under a bank guarantee<\/b>, if the buyer is unable to make the payment to the seller or creditor, then the bank pays the fixed amount to the seller as the obligations of the contract are not met. On the other hand, under a letter of credit<\/b>, the bank makes the payment to the seller once he or she delivers. This is because the seller has completed fulfilling the required obligations.<\/p>\n
Bank guarantees are competitively priced in nature generally. They are usually valid for a long period. The tenure of a bank guarantee is usually high. Moreover, bank guarantees are commonly accepted in almost all countries. Bank guarantees are available in Indian Rupee as well as currencies of other nations. Hence, they are very helpful for global transactions with parties in different foreign countries.<\/p>\n
Grand City Investment Limited is a Genuine Bank Guarantee Provider, Top Bank Guarantee (BG) Providers, top provider of leased bank guarantee, leading provider of bank guarantee, top bank guarantee provider, genuine bank guarantee provider, real bank guarantee (BG) provider, international bank guarantee providers and leading provider of leased bank guarantees.<\/strong><\/p>\n