The Bank Guarantee First Demand is a crucial financial instrument in Indian commercial transactions, commonly used to secure contractual obligations, tender participations, and performance commitments. This document type is essential when immediate, unconditional payment security is required, particularly in large commercial contracts, infrastructure projects, or international trade dealings. The guarantee, governed by Indian law, follows strict Reserve Bank of India (RBI) guidelines and local banking practices. It differs from conditional guarantees as it requires the bank to pay immediately upon receiving a compliant demand, without investigating the underlying dispute or requiring proof of default. The document includes specific details about the guarantee amount, validity period, demand requirements, and payment terms, making it a preferred security instrument in high-value commercial transactions where prompt payment assurance is crucial.
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1. Parties: Identifies the bank (guarantor), the beneficiary, and the applicant (principal debtor)
2. Background: Brief description of the underlying transaction or relationship necessitating the guarantee
3. Definitions: Defines key terms used in the guarantee including 'Guarantee Amount', 'Expiry Date', and 'Demand'
4. Guarantee and Payment Obligation: Core section stating the bank's unconditional obligation to pay upon first demand
5. Amount and Currency: Specifies the maximum guarantee amount and currency
6. Validity Period: States the effective date and expiry date of the guarantee
7. Demand Requirements: Specifies the form and content requirements for making a valid demand
8. Payment Terms: Details the timeline and method of payment upon receipt of valid demand
9. Non-Assignment Clause: Prohibition or conditions for assignment of the guarantee
10. Governing Law and Jurisdiction: Specifies Indian law as governing law and relevant jurisdiction
1. Counter Guarantee: Required when there's a counter-guarantee arrangement with another bank
2. Reduction Clause: Used when the guarantee amount can be reduced progressively
3. Extension Provisions: Include when the guarantee may need to be extended beyond initial expiry
4. Multiple Beneficiaries: Required when there are multiple beneficiaries with specific rights
5. Force Majeure: Optional clause dealing with extraordinary circumstances affecting guarantee operations
6. Language Provision: Required when the guarantee might be used internationally or in multiple languages
1. Form of Demand: Template for making a valid demand under the guarantee
2. Specimen Signatures: Authorized signatures of bank officials and verification procedure
3. Supporting Documents: List and formats of documents required to accompany the demand
4. Communication Details: Complete contact details and communication methods for all parties
5. Underlying Contract Details: Summary of the main contract or obligation being guaranteed
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Banking & Financial Services
Construction & Infrastructure
International Trade
Manufacturing
Energy & Utilities
Real Estate Development
Telecommunications
Government & Public Sector
Defense Contracting
Mining & Resources
Relevant Teams
Legal
Finance
Treasury
Commercial
Risk Management
Compliance
Project Management
Trade Finance
Credit
Corporate Secretarial
Relevant Roles
Chief Financial Officer
Treasury Manager
Financial Controller
Commercial Director
Contract Manager
Legal Counsel
Risk Manager
Banking Relationship Manager
Project Finance Manager
Compliance Officer
Company Secretary
Trade Finance Manager
Credit Manager
Business Development Director
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