Irrevocable guarantees given in favour of real and legal persons residing in-country or abroad, with the purpose of a delivery of a product, performing a work or repayment of a debt and other reasons to the addressee entities or individuals, issued in TL or foreign exchange, regarding that the amount that should be paid by the party undertaking the work delivery and commitment to be realized will be paid by the bank unconditionally in case the work, delivery or commitment is not realized in a timely manner and under the conditions. Maturity may be definite or indefinite.
A bank guarantee regarding the payment that will be made upon the notice of a intermediary bank in accordance with the agreement between importer and exporter, within the framework of the exporter’s request and conditions determined and presentation of the documents showing that the related product or service is provided within the prescribed time. The importer’s bank undertakes that the payment will be made to the seller against the presentation of the documents showing that the products are shipped within the prescribed time through a bank in the exporter’s country. Used in both international and domestic trade. Because, banks are unbiased, independent from the buyer and the seller and only transacts in accordance with the rules defined in the L/C and based on the documents presented. Thus, a safe trade is made by eliminating the communication difficulties due to different time zones and thousand kilometres of distance.
Letters of Credit are subject to the “Uniform Customs and Practice for Documentary Credits” brochure issued by International Chamber of Commerce.
These letters of credits are within guarantee provision and are issued as an assurance that the monetary obligations related to a borrowing or an advance payment will be fulfilled in time or upon the fulfilment or non-fulfilment of an obligation that the payment will be made. Failure to perform the work or the defective state of the counterparty is guaranteed. Since the banks are prohibited from providing sureties and guarantees according to US law, in order to be able to do business or repayment, the standby L/C was launched by using the letter of credit and the guarantee letter and the guarantee usage were applied in this way. Standby L/C has become an international financing product over time.
Documents within guarantee provision which; are issued to beneficiaries residing abroad for delivery of goods, performing a work or payment of a debt, that are issued in foreign currency, consisting the consent that the letter amount will be paid unconditionally and in foreign exchange in case the related obligation is not fulfilled.
The counter-guarantee given to the guarantor bank abroad which will issue a letter of guarantee on behalf of the issuing bank addressing the persons resident abroad upon the Issuing Bank’s request. The bank issuing the guarantee letter against a counter-guarantee from a bank undertakes the risk of the bank sending the counter-guarantee.