Financial Instruments

BG or MT760 is an irrevocable commitment issued by a bank on behalf of their customer. Whereas they have entered into a contract to buy goods or perform their project. BG is a promise from buyer to meet all financial obligations to the supplier in the event of default. In other words, a BG is an undertaking of a bank on behalf of its customer.

Furthermore, BG often helps firms conduct their business with parties they would never get the chance to deal with. Many suppliers will often choose to do business with customers that have a BG because it eliminates the fiscal risk. BG reduces their fear of not receiving the proper payment for the goods that they are selling.

Bank Guarantees are issued for a variety of purposes such as;

Standby Letter Of Credit (SLOC) is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in which the bank fulfills payment obligations by the end of the contract if their client cannot. it is also known as MT760

Standby Letters of Credit proves the buyer’s credit worth and payment strength. Moreover, it provides a complete security of not making any payment loss. Therefore, it is a preferable financial instrument by traders and is most reliable in business transactions.

Standby LC is often used in local and international trade transactions for buying goods. MT760 can also be used as Collateral for Credit Enhancement. Thus, it is ideal for companies planning to expand their business but without giving up their equity. Hence, it improves company’s cash flow. Also, it allows companies to use their funds for alternate purposes before payments become due.