Guarantees & Bonds

Bank guarantees defend both parties in a contractual arbitration from credit risk. For example, a construction company and its raw material supplier may enter into a contract to build a complex. Both companies may have to issue bank guarantees to prove their financial reliability and capability. In a case where the supplier fails to deliver the raw materials within a stipulated time, the construction company would notify the bank, which then pays the company the amount specified in the bank guarantee.

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