Objective

Guarantee is issued to effect payment against presentation of a written statement of guarantee holder (beneficiary) to the effect that a given contractually agreed obligation has not been fulfilled.

Types of Guarantee

Nepal Development Bank Ltd. provides the following Bank Guarantees:

• Bid bond

To be sure that the party who are bidding (competing) for the contract are willing to adhere to the terms of the offer, third party demands a bid bond guarantee in the amount 1%-5% of the value of the contract. In this case, bid bond guarantee is issued to the third party on behalf on the applicant (bidet). The validity of this bond is usually from 3 -6months and it can be extended if the party requests for extension.

• Performance Bond

On behalf of the applicant, performance bond is issued to the beneficiary to ensure that all- counterfactual obligations, usually in terms of performance and services are met.
The validity of this bond is usually more than one year and it can be extended if the party requests for extension.

• Advance payment Guarantee

The advance payment guarantee is issued in favor of buyer to ensure that the advance payment will be refunded if the seller fails to meet his\her contractual obligations.

• Financial Guarantee and others guarantee