A Bank Guarantee is a financial instrument provided by a bank, guaranteeing that the liabilities of a debtor will be met. If the debtor fails to fulfill their obligations, the bank covers the loss.

Common types include Performance Guarantees, Financial Guarantees, Bid/Tender Guarantees, Advance Payment Guarantees, and Deferred Payment Guarantees. Each type serves different purposes in securing financial and contractual obligations.

The main parties include the applicant (the party requesting the guarantee), the beneficiary (the party receiving the guarantee), and the issuing bank (the bank providing the guarantee).

A bank guarantee acts as a promise from the bank to cover a loss if the applicant fails to fulfill contractual obligations. The bank assesses the applicant's creditworthiness before issuing the guarantee. If called upon, the bank pays the beneficiary.

Benefits include increased trust in business transactions, reduced risk for the beneficiary, improved creditworthiness for the applicant, and facilitation of trade and project execution.

Required documents often include the guarantee application form, details of the contract or obligation, financial statements of the applicant, identification documents, and any collateral if required by the bank.