Document background
The Guarantee Facility Agreement is a crucial document in Indian banking and commercial practice, used when a business requires a bank or financial institution to provide guarantees to third parties. These guarantees may be required for various purposes such as bid bonds, performance guarantees, or financial guarantees. The agreement establishes the framework under which multiple guarantees can be issued up to an agreed facility limit, specifying the rights and obligations of all parties involved. It ensures compliance with Indian banking regulations, particularly RBI guidelines on bank guarantees, and includes provisions for security, enforcement, and dispute resolution under Indian law. The document is essential for businesses engaging in contracts requiring bank guarantees and for financial institutions managing their guarantee portfolio risks.
