Bank guarantee

Secure your obligations conveniently

This service is offered to entrepreneurs. We are here to provide assistance to you and your partners when needed.

What is a Bank Guarantee?

A bank guarantee is one of the methods of ensuring fulfillment of obligations, when a bank (guarantor) issues at the request of a debtor (principal) a written obligation to pay a creditor (beneficiary) a sum of money and when the creditor (beneficiary) makes a demand for its payment.

Key concepts to know

  • Principal: the person who executes the bank guarantee.

  • Beneficiary: the person who receives money under the bank guarantee if the principal has not fulfilled its obligations or has not done it adequately.

  • Guarantor: the one who pays the beneficiary money under the bank guarantee for the principal who has violated the terms of the contract.

  • Clients: legal entities, individual entrepreneurs. Can be residents of the Kyrgyz Republic.

Types of Guarantees

Tender guarantee

A guarantee to ensure that a bidder fulfills its tender obligations to the client/contractor. The guarantee is required for participation in tenders and ensures payment of the guaranteed sum of money in case the Principal withdraws its bid after the deadline for consideration of bids, and if the Principal refuses to sign a contract with the customer/contractor for the supply of goods/services or to provide it with a performance guarantee.

Guarantee of return of advance payment

This document is provided by the contractor to confirm that the advance payment has been spent for the intended purpose and is executed in case the advance payment is given to the contractor. In some cases, the terms of the contract may request the payment of an advance be made by the client to the contractor. The amount of such advance may be up to 30% of the contract value. Before receiving the designated amount, the executing company must provide a guarantee of its return.

Bank guarantee for the fulfillment of obligations

This type of guarantee is provided by the Bank before concluding a government or other contract to the company that became the winner of the tender. The winning company is obliged to provide the customer with a guarantee that in case of non-performance or improper performance of its obligations, the Bank will pay the beneficiary a certain guaranteed amount.

Payment guarantee

A type of bank guarantee used to secure obligations to pay for goods and services. Usually payment guarantees are used to obtain a commercial loan. The seller (beneficiary) agrees to defer payment if the receipt of such payment is secured by a bank guarantee. If the buyer (applicant) fails to make payment when due, the seller sends its demand for payment to the Bank and receives the required amount up to the amount of the guarantee.

Terms and Conditions

  • Age of the principal – from 21 years old, provided that the repayment of the guarantee under the contract occurs before the participant reaches 65 years.

  • Currencies: Kyrgyz Som and US Dollar

  • Amounts: from 12,500 to 14,000,000 in KGS; from 200 to 200,000 in USD

  • Term: up to 12 months

Rates

  • Fee for providing a guarantee against cash collateral 0.4% of the guarantee amount, minimum fee – 2000 KGS / 25 USD (irrespective of the guarantee term)

  • For changing the terms of the bank guarantee: if the terms of the guarantee are changed, the old guarantee is canceled and a new one is issued with a fee.

  • 0.4% of the guarantee amount, minimum commission 2000 KGS / 25 USD (regardless of the guarantee term).

  • The commission is withheld from the amount of the guarantee on a one-time basis upon issuance of the guarantee and is non-refundable. If it is necessary to change the terms of the previously approved Bank guarantee, a new application for the Bank guarantee is accepted, in this case the previously issued one is subject to return and annulment.

The appendixes are available in Russian and Kyrgyz languages only. Please follow this link.

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