Banking

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Satyanarayanan (Querist)

01 May 2010 Can any body explain me about Bank Guarantee?
If Bank Guarantee is given by a bank on behalf of a company, does that company has to
i) provide any commission to that bank?
ii) the company has to set aside some
amount to the bank so that after BG period is over the same amount is transferred to the cc account of the company?

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

01 May 2010 dear sir,
as per chapter 4 and 5 import licence i.e. Advance licence and Epcg licence issued by the DGFT / CONCERNED RLA, IN TRERMS OF FOREIGN TRADE POLICY 2009-2014, AND THEN BEFORE IMPORT , THE CUSTOM AUTHORITY IF THE TURNOVER OF EXPORTER IS LESS THAN 5 CRORE FILED A BANK GUARANTEE OTHERWISE EXCESS 5 CRORE SUBMIT LUT / BOND INLIEU OF BG.
AS PER PARA 4.26 OF HAND BOOK OF PROCEDURE OF VOL-1(2009-2014) THE EXPORT OBLIGATION FULFILLED AFTER IMPORTATION AND EXPORTATION THE CONCERNED DGFT, / RLA, ISSUE THE EXPORT OBLIGATION DISCHARGE CERTIFICATE (EODC) EXPORTER AND THEN EXPORTER OR SERVICE PROVIDER RELEASE THIS BANK GUARANTEE / BOND OR LUT.

BANK ALSO CHARGE COMMISSION OR CHARGES AS PER NORMS FIXED BY THIER GUIDELINES.

THX

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

02 May 2010 for opeing of Bank guarantee you need to pay commission and margin money to the bank the commission is expenditure for you and margin money is with bank for up to the BG validity period with applicable interest rate and once the BG is closed the same margin money with interest will credit your account

Satyanarayanan

Satyanarayanan (Querist)

02 May 2010 Thank You Ramesh Krishnan that was very good explanation. Anyway can u explain me about the role (detailedly) played by EPCG in BG.

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