Some kinds of BGs
a) Bid bond gty :- In respect of International tenders these BGs are required;they ensure that contractor is really able to comply with it. The contractors always need other guarantees.It is a performance guarantee.
2) Retention Mony gty – It releases the region money to the contractor.
3) Foreign gty — Gty executed by or in favour of client residing outside India pertaining to a) Transactions in India b) Transactions I foreign countries.,(Seek clearance from International Deptt.CO).<\/p>\n
$ While BGs are issued prepare 3 copies ; obtain one copy duly singed by client having agreed to BG format and file.
$ if BG is issued in the format other than Model, IBA approved format ,then each page be signed by approving authority\/ Advocate.
$ Obtain deposit under lien and other securities as per sanction,charge commission in advance.
$ Invariably obtain Counter guarantee in all cases also even covered by 100% deposit as margin.<\/p>\n
@@ All BGs contain a Notwithstanding clause – stating max amount,period and limitation period within which notice of invocaction be given to bank.@@@<\/p>\n
### Renewal of BG :- On receiving a letter from beneficiary and our client it it can be considered. Remember it is as good as issue of B G. Some department accept a mere letter some seek fresh BG. Either is considered.###
$ The BG as per Sec 28 of Indian Contact Act1872, limitation period of LG(BG) is 30 years in Govt\/Semi Govt deptts.; and 3 years for others from Service of Notice,before specified date in BG.(date of expirary+ notice period if any).
$ BG after expirary be got back or a letter from the Beneficiary extinguishing their liability be obtained. Alternative a letter be forwarded to Beneficiary stating that the BG has expired and informing that it will be cancelled and bank will not be liable if in a specified time (say 21days) no reply is recd. Thereafter the BG is cancelled and reverse the contra(Dr BG Issued Cr BG granted).
## In case of invocation notice on bank
1 Acknowledge instantly to beneficiary.
2 Go thru BG and ensure that the terms of our BG if any are complied by beneficiary.
3 Inform(On telephone and Mail or in writing and note this fact with date \/time etc) and ask your client to deposit money within 24 hours and stating that failing which you will pay and responsibility will be theirs in clear terms.
4 You have to honour your commitment generally without demur ie 48 hours. Obtain Original BG (some Govt deptt confirm cancellation of BG and filing) and then only pay thru DD\/BC\/RTGS\/NEFT. Then reverse the contra entry.
Recover our dues by encashing deposit and other securities. You may recover from CD account; from CC\/OD ac if DP is available and notify client. If still short a account be opened as a Nominal ac BG Invoked ac XYZ..and amount be paid. Recover amount with interest as quoted in Counter Gty.<\/p>\n
Last resort is to recover from Courts.<\/p>\n
I have handled over 2000 BGs in my 40+ years of carrier and invocation was in 4 to 5 cases only. As such handle this lucrative business but after ensuring capacity, worth and integrity of the applicant.
A Question always asked Can a Banker refuse payment or stop payment.
ANSWER is NO NO NO.
Except in case of i) Fraud ii) Stay order from a Competent court ie from Distt.and Sessions Judge and above. iii)If conditions embodied in BG are not fulfilled.
It is advisable to take take help of legal advisor in case of ambiguity.
(In most cases even after the letter is received the client requests for a day or two to bring a letter to renew BG from the beneficiary and we do consider based on quality of our client. My experience tells that we can consider the request mostly)<\/p>\n
SUPREME COURT says” BANKERS WORD IS SACROSANCT” and must be honoured.<\/p>\n
MY Dear we have elaborately discussed the B G issues. IF any Q’s are in your mind raise them.
(All other details are in “A Kit On Documentation” available on bank’s web cite Staff only cite in CBS).<\/p>\n
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$$$$$ Your views are Solicited.$$$$$
Seniors are <\/p>\n","protected":false},"excerpt":{"rendered":"
LESSON No 13 \u2013 Last lesson on BGs Some kinds of BGs a) Bid bond gty :- In respect of International tenders these BGs are required;they ensure that contractor is really able to comply with it. The contractors always need other guarantees.It is a performance guarantee. 2) Retention Mony gty – It releases the region…<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":1165,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-1196","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/pages\/1196","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1196"}],"version-history":[{"count":1,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/pages\/1196\/revisions"}],"predecessor-version":[{"id":1197,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/pages\/1196\/revisions\/1197"}],"up":[{"embeddable":true,"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=\/wp\/v2\/pages\/1165"}],"wp:attachment":[{"href":"https:\/\/yourcareerheights.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1196"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}