What is bank builty

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 October 2015 R/Sir,

I want a start Busniess in all over india but no trust to my client on my firm so please give me procedure of trust or bank builty

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 It looks like you're asking about **bank guarantee** (commonly referred to as "bank builty" in informal or regional language) — and how it can help build **trust with clients** when starting a business.

### 🔹 What is a Bank Guarantee (Bank Builty)?

A **Bank Guarantee** is a **promise from a bank** that if your business fails to fulfill a contract or obligation, the bank will cover the loss up to a specified amount. It gives **confidence to your clients** that they will not suffer financial loss if something goes wrong.

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### 🔹 Why Do You Need It?

When you're starting a business, especially across India, **clients may not know or trust your firm** yet. A **Bank Guarantee** shows you're financially reliable — making it easier to win contracts or supply deals.

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### 🔹 Types of Bank Guarantees

1. **Performance Guarantee** – Assures the buyer that work will be completed as agreed.
2. **Financial Guarantee** – Guarantees repayment of money (e.g., advance payment refund).
3. **Bid Bond Guarantee** – Common in tenders; assures commitment if your bid is accepted.

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### 🔹 Procedure to Get a Bank Guarantee

1. **Open a Current Account** with a bank.
2. **Apply for the Bank Guarantee** – Request a specific type and amount.
3. **Submit Documents** such as:

* Company registration documents
* PAN, GST certificate
* Financial statements (ITR, balance sheet)
* Project/contract agreement with the client
* Collateral or margin money (banks usually require security)
4. **Bank Verification & Approval**
5. **Pay Guarantee Fees** – Generally 0.5% to 3% per annum of the guarantee amount.
6. **Bank Issues Guarantee** – You can now share this with your client.

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### 🔹 Example Scenario

You are supplying machinery to a buyer in another state. The buyer wants assurance. You get a **Bank Guarantee** for ₹10 lakhs. If your company fails to deliver, the buyer can claim the ₹10 lakhs from your bank.

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If you need help with a **sample application letter** to request a bank guarantee, I can draft one for you. Would you like that?

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