A brief description:

Letter of guarantee (hereafter referred to as “LG”) is a written commitment to the beneficiary issued by the guarantor (the bank) on request of an applicant guaranteeing the applicant’s fulfillment of certain obligations under the contract entered in with the beneficiary.  

A brief description:

Letter of guarantee (hereafter referred to as “LG”) is a written commitment to the beneficiary issued by the guarantor (the bank) on request of an applicant guaranteeing the applicant’s fulfillment of certain obligations under the contract entered in with the beneficiary.  

• In order to expand the business relationship.
• When the social and economic environment of the importer is not stable.
• If the buyer’s solvency is doubtful.
• If the legal conditions or rules of the country require.

• Opportunity of diminishing the risk caused by default of contract payment and product supply.
• Opportunity of resolving mutual distrust between participant parties.
• Opportunity of expressing financial capacity of yours to the bidding coordinator.
• Opportunity of receiving the finance of advance payment.
• Opportunity of refunding the advance payment in the case if the implementer didn’t comply with its duties stated in the contract.
• Opportunity of confirming the fulfillment of contract performance.
• Opportunity of confirming the conditions of agreement and products’ quality.

Bid bond:

A bid bond is a written guaranty that ensures payment obligation of a customer/or bidder to proceed the contract according to the price offer sent to a bid announcer. Also, a bid bond represents validity of bidding materials of a bidder/or customer and reduces the following risks of a bid announcer:

• To return a bidding after expiration of bidding closing date.
• To refuse making the contract after bidding selection is completed.
• To not send necessary guarantees (performance and advance payment guarantees) that were stated in the bidding invitation by the participant who was selected in the bidding after the contract is completed.  

Advance payment guarantee:

 

An advance payment guarantee is issued by the bank guaranteeing the implementer to perform the certain work and disburse the advance payments received from the buyer/order maker/coordinator of a particular work or service according to the purpose.

 

In the case if project implementer/performer did not comply with its contractual duties, the bank is responsible for paying the advance payment

 

Performance guarantee:

 

A performance guarantee is the document that ensures payment obligation and issued meeting requirements made by the bidding announcer/order marker of a particular work or service in order to confirm the performance of particular contractual obligations of the implementer/performer.

 

This guarantee is used with the purpose to decrease the risk, where implementer/performer does not comply with its contractual duties of providing services or foreign trade.

 

Payment guarantee:

 

A payment guarantee is issued when the bank guarantees the obliged payment from the importer to the exporter according to the trade agreement. A payment guarantee is possible to be issued partially and fully as total contract amount.

 

LG issued abroad/overseas
To issue a LG	0.2% /min. USD 150.0, max. USD 350.0/
Additional services (fees deducted based on the customer’s request)
To increase the amount /from the increased amounts/	0.2% /min. USD 50.0, max. USD 150.0/
To amend LG’s terms and conditions	USD 50.0
To cancel a LG	USD 50.0
LG issued domestically
To issue a LG	MNT 30,000.0
To change LG’s conditions	MNT 20,000.0
To cancel a LG	no fee
The risk commission will be charged additionally for issuance of uncovered LG.	According to contract:   (min. USD 150.0)
	According to contract: (Foreign currency - min. USD 50.0)
	According to contract: (Domestic currency – min. MNT 50,000.0)
A particular customer is responsible for paying postal fees /via DHL/ to dispatch LG documents.
Note: Any other banking fees and commissions related to a LG shall be borne by a customer.

 

 

 

Fees related to receiving overseas originated LG
To advise receipt of a LG	USD 30.0
To receive an invoice and other related documents and send for payment upon verification	0.15% /min. USD 75.0, max. USD 350.0/
Additional services (fees deducted based on the customer’s request)
To advise amendments of a LG	USD 10.0
To advise cancellation of a LG	USD 25.0
A particular customer is responsible for paying postal fees /via DHL/ to dispatch LG documents.
Note: Any other banking fees and commissions related to a LG shall be borne by a customer.

1. Request to issue a LG; (according to the Bank form)
2. Sales and service agreements, or related invoices;

Click here to get bank application form of L/G issued domestically;

Click here to get bank application form of L/G issued overseas;

Click here to get bank application form for L/G amendment made domestically;

Click here to get bank application form for L/G amendment made overseas.

 

To issue a Letter of Guarantee through our bank you need to have a current account with the bank

If you have a long-term relationship with your supplier you can use our collection service to lower your expenses

You can monitor your credit account through TDB Online