Document background
A Bank Counter Guarantee is essential in commercial transactions where multiple banking institutions are involved in providing financial security. This document is typically used when a bank (Original Guarantor) requires back-to-back support from another bank (Counter Guarantor) to issue a guarantee to a beneficiary. The arrangement is particularly common in cross-branch or inter-bank scenarios within India, where the original guarantor bank seeks to distribute its risk exposure. The document must comply with Indian banking laws and Reserve Bank of India guidelines, including specific requirements for format, content, and execution. It includes detailed provisions for the guarantee amount, validity period, conditions for invocation, and payment mechanisms, while ensuring alignment with Indian Contract Act principles and Banking Regulation Act requirements.
