Document background
The Conditional Bank Guarantee is a crucial financial instrument in Malaysian business transactions, particularly in sectors requiring performance or payment security. This document type is commonly used when a party (the beneficiary) requires financial security from another party (the principal), with a bank acting as guarantor. The guarantee is 'conditional' because payment is subject to specific documented conditions being met, unlike unconditional guarantees which are payable on first demand. The document must comply with Malaysian banking regulations, particularly the Financial Services Act 2013 and Bank Negara Malaysia guidelines. Conditional Bank Guarantees are typically used in construction projects, procurement contracts, and international trade transactions where parties seek to mitigate performance or payment risks while maintaining certain protective conditions for the guarantor bank.
