Guarantees

We understand the importance of a reliable and regulated partnership with business partners home or aboard. Therefore, we offer several types of bank guarantees which significantly improve relations with suppliers and costumers and speed up and ensure payments, delivery and quality.

What is bank guarantee?

A bank guarantee is a security instrument issued by the bank, which is primarily used in commercial finance, and it is a duty of a bank to pay a guarantor certain amount of money on a written request within the time limit specified in the guarantee if the client of the bank does not fulfill its obligations to the beneficiary. 

 

A bank guarantee is intended for the following:

  • Legal entities, regardless of the type of registration, that hold an account with ProCredit Bank and perform regular import and export activities
  • Private clients that sell goods and services within the country or abroad
  • In some cases we offer bank guarantees to private individuals

 

Who are the subjects of a banking guarantee process?

The entities are engaged in the banking guarantee process:

  • Ordering entity (Buyer)
  • Bank/Issuer (Guarantor)
  • Avisable bank
  • Banking guarantee beneficiary (Seller)

 

What if one of parties does not respect the terms of the agreement?

The beneficiary is protected from non-fulfillment of contractual obligations from the other party (in terms of payment or delivery of goods / services). For example, if the customer fails to fulfill his contractual obligations, ProCredit Bank executes payment upon the request of the seller, after the presentation of the documents specified in the text of the guarantee. If the conditions are met, then the payment is made to the user (up to the maximum amount of the guarantee) unconditionally.

The guarantee is protected against unwarranted guarantee activation. If the guarantee user does not deliver the goods or services in accordance with the agreed terms, he / she will not be able to submit the documentation confirming the delivery, quality or quantity of the delivered product or service and will not receive payment. 

 

 

What types of bank guarantees do we offer?

We offer the following types of guarantees to our clients dealing with import of goods, advance payments, participation in tenders, engagement in the execution of services or have an obligation to pay indirect taxes (import and export duties, excise taxes, etc.)

 

Payment guarantees

Type

Purpose

Amount   

Validity

Payment guarantee

Secure payment or delivery of goods

No more than the amount stated in the agreement, which is a basis for issuing a guarantee

Within the validity on the proforma invoice, contract or order + deferred payment period 

Credit guarantee

They are typically issued in the case of cross-border loans or loans financed by the state or other institutions. The issuing bank guarantees that the client (the principal) will fulfill the conditions stated in the loan agreement

 

 

 

Factual bank guarantees

Type

Purpose

Amount 

Validity

Tender guarantee  (Bid Bond) 

Ensure the fulfilment of contractual obligations arising from public procurement (tender)

2- 5% of the bid, depending on the amount of the offer

No longer than the validity of the tender, extended to allow for a complaint period

Advance payment guarantee

Secures the advance supplied by the beneficiary of the guarantee to the debtor of the guarantee

The amount of the issued advance or an amount lower than the issued advance

Until delivery/performance of the goods/service or shortly afterwards

Performance guarantee

It guarantees the fulfillment of contractual obligations by the customer.

This is a typical percentage of contract value (mostly ranging from 5 to 10%)

Till the fulfillment of the conditions stated in the contract.

Customs guarantees

Secure a debt which has arisen or could have arisen during the following customs procedures: release of the goods (e.g. VAT)

 

 Valid for taxes, default interest rates, etc. which the client did not pay up to their due date

Guarantee on a guarantee period

Provides funds to remedy the shortcomings of improperly performed contractual work

 


Until the fulfilment of the guarantee period. Usually a year or two.

 

For more information about application procedures for bank guarantee and deadlines and terms, please contact Call Center of the ProCredit Bank BiH at 033 / 250-950 or send us an inquiry to info@procreditbank.ba.