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Cash Backed Bank Guarantee for Saudi Arabia

Cash Backed Bank Guarantee Template for Saudi Arabia

A comprehensive banking document governed by Saudi Arabian law that establishes a bank guarantee fully secured by cash collateral. The document details the terms under which a bank provides a guarantee to a beneficiary, backed by cash deposited by the applicant. It incorporates provisions compliant with Saudi banking regulations, SAMA guidelines, and Shariah principles, specifying the mechanisms for guarantee issuance, demand procedures, and cash collateral management. The document includes specific provisions for the protection of all parties' interests while ensuring compliance with Saudi Arabian banking and commercial laws.

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Cash Backed Bank Guarantee

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What is a Cash Backed Bank Guarantee?

The Cash Backed Bank Guarantee is a crucial financial instrument in Saudi Arabia used to secure commercial obligations across various business transactions. It provides a high level of security to beneficiaries due to its cash-backed nature, while operating within the framework of Saudi Arabian banking regulations and Shariah law. The document is typically used when a party needs to provide a strong financial guarantee to a beneficiary, with the unique feature that the guarantee is fully secured by cash deposited with the issuing bank. This arrangement is common in government contracts, large commercial transactions, and international trade dealings where Saudi Arabian entities are involved. The document must comply with SAMA regulations, the Banking Control Law, and Islamic finance principles, making it a robust instrument in the Saudi Arabian financial landscape.

What sections should be included in a Cash Backed Bank Guarantee?

1. Parties: Identification of the Bank (Guarantor), the Applicant (providing cash backing), and the Beneficiary

2. Background: Context of the guarantee, underlying relationship between Applicant and Beneficiary, and purpose of the guarantee

3. Definitions: Key terms used throughout the guarantee, including 'Guarantee Amount', 'Cash Collateral', 'Expiry Date', etc.

4. Guarantee Terms: Core terms including guarantee amount, validity period, and conditions for payment

5. Cash Collateral Arrangements: Details of the cash backing, including amount, account details, and blocking mechanisms

6. Bank's Rights and Obligations: Scope of bank's commitment, payment obligations, and rights regarding the cash collateral

7. Demand Procedures: Process and requirements for making a valid demand under the guarantee

8. Reduction and Release: Conditions for reduction of guarantee amount and release of cash collateral

9. Fees and Charges: Bank's fees, charges, and commission for issuing and maintaining the guarantee

10. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction for disputes

What sections are optional to include in a Cash Backed Bank Guarantee?

1. Shariah Compliance Declaration: Statement confirming compliance with Islamic principles - required if the guarantee needs explicit Shariah compliance

2. Foreign Law Considerations: Additional provisions for cross-border guarantees - required if beneficiary is outside Saudi Arabia

3. Multiple Beneficiaries: Additional provisions for handling multiple beneficiaries - required if more than one beneficiary

4. Language Provisions: Provisions regarding prevailing language - required if guarantee is bilingual

5. Counter-Guarantee Provisions: Additional terms if guarantee is issued under a counter-guarantee structure

What schedules should be included in a Cash Backed Bank Guarantee?

1. Schedule 1 - Form of Demand: Template for making a compliant demand under the guarantee

2. Schedule 2 - Cash Collateral Account Details: Specific details of the account where cash collateral is held

3. Schedule 3 - Fee Schedule: Detailed breakdown of all applicable fees and charges

4. Schedule 4 - Required Documents: List of documents required for guarantee issuance and demands

5. Appendix A - Specimen Signatures: Authorized signatures for the parties involved

6. Appendix B - Supporting Documents: Copies of underlying contract or other relevant documents

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Saudi Arabia

Document Type

Bank Guarantee

Sector

Banking

Cost

Free to use
Relevant legal definitions






























Clauses






























Relevant Industries

Banking & Financial Services

Construction & Infrastructure

International Trade

Real Estate Development

Oil & Gas

Manufacturing

Government & Public Sector

Telecommunications

Mining & Resources

Retail & Commerce

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Commercial Operations

Trade Finance

Islamic Banking

Corporate Banking

Project Finance

Relevant Roles

Treasury Manager

Chief Financial Officer

Finance Director

Legal Counsel

Compliance Officer

Risk Manager

Banking Relationship Manager

Contract Manager

Commercial Director

Credit Manager

Islamic Banking Officer

Trade Finance Manager

Company Secretary

Financial Controller

Project Finance Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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