A Cash Backed Bank Guarantee is a crucial financial instrument used in various commercial transactions where one party requires financial security from another. This document is specifically designed for use in India, conforming to local banking regulations and RBI guidelines. It is typically used when an applicant needs to provide a bank guarantee but must first deposit cash collateral with the issuing bank as security. The guarantee can be used for various purposes including bid bonds, performance guarantees, advance payment guarantees, or rental deposits. The document includes essential provisions regarding the cash margin requirement, validity period, demand procedures, and enforcement mechanisms, while ensuring compliance with Indian banking and contract law requirements. It's particularly valuable in situations where the beneficiary requires additional security for a transaction, and the applicant is willing to provide cash backing to obtain the bank guarantee.
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1. Parties: Identifies all parties: the Bank (Guarantor), the Applicant (who provides the cash backing), and the Beneficiary
2. Background: Details the underlying transaction or relationship necessitating the bank guarantee
3. Definitions: Defines key terms used throughout the guarantee document
4. Guarantee Amount: Specifies the maximum amount of the guarantee and currency
5. Cash Margin Details: Specifies the cash backing amount, account details, and terms of the cash deposit
6. Duration and Validity: Specifies the effective date, expiry date, and claim period of the guarantee
7. Demand and Payment Terms: Details the conditions and process for making a demand under the guarantee
8. Bank's Rights and Obligations: Outlines the bank's responsibilities and rights regarding the guarantee and cash margin
9. Applicant's Representations and Warranties: Standard representations regarding capacity, authority, and legality
10. Assignment and Transfer: Provisions regarding transfer or assignment of rights under the guarantee
11. Governing Law and Jurisdiction: Specifies Indian law as governing law and relevant jurisdiction for disputes
1. Counter Guarantee: Required when there's a counter-guarantee from another bank or financial institution
2. Multiple Beneficiaries: Required when the guarantee has more than one beneficiary
3. Foreign Currency Provisions: Required for guarantees issued in foreign currency, addressing exchange rate mechanisms
4. Step-in Rights: Optional provisions allowing the bank to step into the underlying transaction
5. Automatic Extension Clause: Optional provision for automatic extension of guarantee validity under specified conditions
6. Partial Claims: Required when partial claims under the guarantee are permitted
7. Tax Provisions: Required when specific tax implications need to be addressed
1. Form of Demand: Template for making a valid demand under the guarantee
2. Cash Margin Account Details: Detailed information about the cash margin account and operational procedures
3. Underlying Transaction Documents: Summary or copies of the primary transaction documents
4. Fee Schedule: Details of bank fees, charges, and commission
5. Authorized Signatories: List of authorized signatories for the Applicant and Beneficiary
6. Communication Protocol: Specified format and channels for notices and communications
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Construction and Infrastructure
International Trade
Manufacturing
Real Estate
Energy and Utilities
Telecommunications
Government and Public Sector
Retail
Transportation and Logistics
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Commercial Operations
Corporate Banking
Trade Finance
Credit Administration
Business Development
Relevant Roles
Chief Financial Officer
Treasury Manager
Finance Director
Risk Manager
Legal Counsel
Compliance Officer
Commercial Director
Contract Manager
Banking Relationship Manager
Credit Manager
Financial Controller
Company Secretary
Business Development Manager
Project Manager
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