Bank guarantee is a guarantee issued by a bank or a financial institute to reduce risks in transactions for
both parties involved in the transactions in case of a contract breach.
In an event of a contractual obligation of the seller/ exporter or a payment obligation to the seller/
importer, the bank or the financial institute guarantees to indemnifies the recipient against the
contractual obligations of the exporter or the importer. With this, the risk factor will be reduced
drastically for both parties in a contractual agreement while encouraging the transaction to proceed
effectively.