Bank Guarantees and Standby Letter of Credit - An Overview

Types and Uses in International Trade | URDG and ISP 98 - Main Points | Clauses | Examples | Related SWIFT Messages

Bank guarantees and standby letter of credit are crucial instruments which are used in international trade finance. It is very important to know the concepts behind these instruments for correct and effective usage in international contracts and business.

This course starts from the very basics and provides all the relevant information needed to handle the guarantee/SBLC trade desk. It also provides all the essential information for handling consulting assignments for business analysts.

It covers not only the theoretical knowledge but also the practical aspects like how to use safeguard clauses in the guarantee wordings to avoid wrongful claims. It also discusses how SWIFT messages are used in guarantees and standby letter of credit, the related message types and message and guarantee examples.

This course also has more than 100 questions so that you can evaluate your understanding on the subject.

This course is the best choice to begin learning about guarantees and SBLCs and can be used as a stepping stone for beginning your career in trade finance domain.

Ideal for-

Bankers handling trade finance desk

Business Analysts/ Consultants

Aspirants of CSDG

Course Content-

Introduction

What is guarantee and Standby Letter of Credit?

Key features of Guarantee and Standby letter of credit

Parties in a demand guarantee and Standby letter of credit

ICC Rules for guarantees and Standby letter of credit

Process flow of a demand guarantee

Process flow of a Standby letter of credit

Broad Categories of Guarantees/ SBLCs

Independent/Unconditional/Demand Guarantees and Dependent/Conditional/ Accessory/ Suretyship Guarantees

Direct Guarantees/SBLC and Indirect/ Counter Guarantees and Confirmed SBLCs

Payment Guarantees and Performance Guarantees

Export related Guarantees and Import related Guarantees

Types of Guarantees and Process Flow and Sample Clauses

Bid Bond

Performance Guarantee

Advance Payment Guarantee

Retention Money Guarantee and Warranty Guarantee

Payment Guarantee

Chronology of Guarantees in a contract

Other types of Guarantees

Brief summary of URDG 758 and ISP 98

URDG 758 Article 1 - Article 14

URDG 758 Article 15 - Article 33

ISP 98 Rules

Comparisons

Comparison between SBLC and demand guarantee

Comparison between SBLC and Letter of Credit

Comparison between Letter of Credit and Guarantee

Drafting of SBLC/Guarantee - Safeguard Clauses

Mandatory information to be included

Variation of value - Reduction in payment guarantee/SBLC

Variation of value - Reduction in advance payment guarantee/SBLC

Variation of value - Increase in performance guarantee/SBLC

Operative Event/ Date of a Guarantee/ SBLC

Evergreen/ Auto Renewal Clause

Operational Steps of issuing a bank guarantee/ SBLC

SWIFT Messages used in Guarantees and SBLCs

Relevant Message Types

Recent changes in MT 760 Structure

Examples of Guarantee and SBLC

Example of a Performance Guarantee

MT 700: Example of a Standby Letter of Credit

MT 760: Example of a Standby Letter of Credit

Practice Test