Bank Guarantee Process for Accounting

When a bank asks for a 25% margin and 75% funding, it means: - _Margin (25%):_ The bank requires you to pay 25% of the total amount (e.g., loan or credit facility) as a down payment or security deposit. This amount is not financed by the bank and is typically paid upfront. - _Funded by bank (75%):_ The bank will provide 75% of the total amount, which means they will lend or finance 75% of the total amount. For example: - Total amount: $100,000 - Margin (25%): $25,000 (paid by you) - Funded by bank (75%): $75,000 (provided by the bank) In this scenario, you would need to pay $25,000 as the margin, and the bank would provide $75,000, totaling $100,000. This is a common arrangement in various financial transactions, such as: - Loans (e.g., home loans, business loans) - Credit facilities (e.g., overdrafts, lines of credit) - Project finance - Working capital finance The bank's requirement for a margin and funding ratio may vary depending on factors like creditworthiness, risk assessment, and regulatory requirements.

Thank you Rama chari your explanation was crystal clear 

So when we do 25 % fuding  they will do FD equal for that amount right andpay us with interest  when the BG exres and its not invoked 

and when bank does fundng on 100 % marging we dont have option for FD and ban will staright charge thei ban commision