The Revolving Bank Guarantee is a specialized financial instrument commonly used in Pakistani business transactions where ongoing security is required for recurring obligations. It is particularly valuable in situations requiring continuous financial assurance, such as construction projects, supply contracts, or recurring business transactions. The document provides a renewable guarantee mechanism where the guarantee amount automatically reinstates after each claim, up to a predetermined maximum amount. This type of guarantee, governed by Pakistani law and regulated by the State Bank of Pakistan, offers more flexibility than standard bank guarantees as it eliminates the need for issuing multiple separate guarantees. The document must comply with the Banking Companies Ordinance 1962, Contract Act 1872, and relevant Prudential Regulations, making it essential to include specific provisions for the revolving mechanism, claim procedures, and regulatory compliance.
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1. Parties: Identification of the Bank (Guarantor), the Applicant (Principal), and the Beneficiary
2. Background: Context of the guarantee, underlying business relationship, and purpose of the revolving guarantee
3. Definitions: Key terms including Guarantee Amount, Validity Period, Reinstatement Terms, and other technical terms
4. Guarantee Amount and Scope: Maximum guarantee amount, revolving mechanism, and scope of the bank's undertaking
5. Duration and Renewal: Initial validity period, automatic renewal conditions, and final expiry terms
6. Revolving Mechanism: Specific terms governing how the guarantee amount reinstates after each claim
7. Claims Procedure: Process for making claims, required documentation, and timeline for settlement
8. Bank's Rights and Obligations: Extent of bank's liability, examination rights, and payment obligations
9. Applicant's Obligations: Responsibilities including fees, counter-indemnity, and maintaining security
10. Governing Law and Jurisdiction: Application of Pakistani law and jurisdiction for disputes
11. Notices: Communication methods and addresses for all parties
12. Fees and Charges: Bank guarantee commission, processing fees, and payment terms
1. Counter-Guarantee Provisions: Required when there's an international element requiring counter-guarantee from a foreign bank
2. Security Arrangements: Include when specific collateral or security is required from the applicant
3. Multiple Beneficiaries: Required when the guarantee has more than one beneficiary
4. Foreign Currency Provisions: Include when the guarantee amount is in foreign currency
5. Step-in Rights: Include when beneficiary requires right to assign or transfer the guarantee
6. Digital Documentation: Include when parties agree to accept digital/electronic claims or communications
1. Schedule 1 - Form of Demand: Template for making claims under the guarantee
2. Schedule 2 - Fee Schedule: Detailed breakdown of all applicable fees and charges
3. Schedule 3 - Security Details: Description of any collateral or security provided by the applicant
4. Schedule 4 - Authorized Signatories: List of authorized persons who can make claims or act for each party
5. Appendix A - Underlying Contract Reference: Details of the primary contract or obligation being guaranteed
6. Appendix B - Claim Documentation Requirements: Specific documents required for making valid claims
Authors
Relevant legal definitions
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Relevant Industries
Banking and Financial Services
Construction
International Trade
Manufacturing
Infrastructure Development
Energy
Telecommunications
Government and Public Sector
Real Estate Development
Mining and Resources
Relevant Teams
Legal
Finance
Treasury
Risk Management
Compliance
Banking Operations
Credit
Corporate Affairs
Procurement
Project Management
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Bank Relationship Manager
Contract Manager
Legal Counsel
Risk Manager
Company Secretary
Project Finance Manager
Procurement Manager
Credit Risk Officer
Banking Operations Manager
Compliance Officer
Financial Controller
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