Using your phone's internet browser
go to:  qna.rediff.com
Click and drag this link to
the Home icon in your browser.
Q.

What is the procedure to encash bank gurantee

Asked by SP Nalavade, 09 Aug '07 10:36 am
  Invite a friend  |  
  Save  |  
 Earn 10 points for answering
Answer this question  Earn 10 points for answering    
4000 characters remaining  
  
    
Keep me signed inNew User? Sign up

Answers (5)

1.

Following process be followed while encashing the bank guarantee -

a) if the bank guarantee text states that a notice of default be given to the borrower prior to encashing the guarantee, then a prior notice of reasonable period be given to the borrower. If the borrower fails to perform its obligations, the beneficiary can proceed with encashment of the guarantee.
b) Upon compliance of a) above, the beneficiary can raise a formal claim on the branch of the bank who issued the guarantee calling upon the bank to remit the guaranteed amount to the beneficiary stating that the borrower has failed and as such there is a default and hence bank should pay the amount of the guarantee.
c) To note that the whole process of encashing the guarantee i.e. a demand to be raised on the bank within the validity period of the guarantee i.e. the expiry period.
Answered by raju dodti, 17 Aug '07 12:43 pm

 
  
Report abuse
Useful
 (0)
Not Useful
 (0)
Your vote on this answer has already been received
2.

if the purpose for which bank guarantee was given you can obtain NOC from that department or company then encash it. However if you received bank guarantee then obtain failure notice about the guaantor a pproach bank with proof and encash guarantee.
Answered by abdus sattarmerchant, 09 Aug '07 10:41 am

 
  
Report abuse
Useful
 (0)
Not Useful
 (0)
Your vote on this answer has already been received
3.

Bank guarantees are issued for different purposes say for payment of advance, for performance of contract etc. The BG can be encashed only for the default of the purpose of issue. For instance, issue of BG for payment of advance against supplies. This BG can be encashed only if there is a default in supply of material. This BG cannot be encashed for non - performance or defective supply of material.
The procedure for encashment of BG is that all proof of default should be submitted throguh our bank to the issuing bank of BG. There is a validity period for all BG's and our claim should be within validity period of BG. The letter should be sent to bank for encashment stating the reason for encashment specifically along with proof of default. If the circumtances are genuine, the issuing bank will ask the supplier to explain the reason. In case the supplier is not able to explain or the explanation is not satisfatory, the bank will inform the supplier that the BG will be encashed and the ...more
Answered by DEVRAJAN A S, 17 Aug '07 12:45 pm

 
  
Report abuse
Useful
 (0)
Not Useful
 (0)
Your vote on this answer has already been received
4.

Bank Gurantee can be encashed after expiery of the period mentioned in the BG itself.It may be because of non performance from the party. For that u have to give an application for encasing it to the bank from where it was issued along with the BG u want to encash duly signed by authorised singnatory.
Answered by kamal thakur, 09 Aug '07 10:42 am

 
  
Report abuse
Useful
 (0)
Not Useful
 (0)
Your vote on this answer has already been received
5.

Once the validity of the ban guarantee is over, you may submit the original in the bank and get your money credited back to your account. However, if the BG is submitted with the Govt Authorities - my friend, you will never get that back.
Answered by vasudevan surendran, 17 Aug '07 12:55 pm

 
  
Report abuse
Useful
 (0)
Not Useful
 (0)
Your vote on this answer has already been received

Ask a Question

Get answers from the community

600 characters remaining

Related Answer

Q.