Non-Fund-Based-Limit

Bank Guarantee / letters of credit are different forms non-fund-based limits

Non-Fund-Based-Limit

Bank Guarantee is used to strengthen and/or secure an obligation under a commercial contract. Customers can apply to the Bank to issue BG in favour of a Beneficiary. After examining and approving the application, the bank executes an agreement with the customer with the required terms and conditions. The bank will then issue the guarantee

A letter of credit is a document issued by bank that guarantees payment for goods or services when the seller provides acceptable documentation. A letter of credit generally has three participants. First, the beneficiary, the person or company who will be paid. Next, the buyer or applicant of the goods or services. Finally, the issuing bank, the institution issuing the letter of credit