Legal Question in Banking Law in India

Re: banking law

revolving bank guarantee connotes that a bank fixes upto a limit for issuing guarantees on behalf of its client and issues guarantees within the limit. When some of the guarantees are not invoked within time or cancelled, fresh guarantees are issued upto the limit sanctioned. For example, a Bank at the request of a customer can fix a limit of say Rs.1 Lakh. It will issue one or more guarantees upto that limit. When the work or performance or earnest money for the guarantee is completed, there may not be occasion to invoke the guarantees issued for those purposes. The client/customer can request for fresh guarantees to be issued in respect of those guarantees which were not to be invoked. It is just like a cash credit limit so that the limit is always maintained notwithstanding the guarantees issued within that limit are cancelled or become uninvokable. There are more advantages for a customer who has to seek more than one guarantee to be issued to his principals/creditors. He need not separately apply every time for issue of number of guarantees within that limit As it is there are no disadvangages in getting such a revolving guarantee limit. The facility is usually granted for contractors who undertake works contract with Government departments.

Re: banking law

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