Bank Guarantee (BG)

A Bank Guarantee is a pledge by a bank to assume the liability for a sale or contract between a buyer and seller.

It is a type of guarantee from a lending organization that signifies that the lending institution ensures that the liabilities of a debtor will be met. In other words, if the debtor fails to perform the obligation, the bank will step in and cover for the debtor.

Bank guarantee can be used for both domestic and international transactions and it helps to reduce the loss to business if the transaction did not go as planned.