International Business

Bank Guarantees

Bank Guarantees

The major objective of this article is to discuss about bank guarantees. A bank guarantee is a assure from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. Note that a bank guarantee is not the same as a letter of credit. Bank guarantees are advantageous to the importer because they protect them when the exporter does not fulfill its obligations.