Trade Finance/Non-Funded Facilities
For the purpose of facilitating corporate business, The First MicroFinance Bank FMFB-A offers a shariah-compliant Islamic Bank Guarantee (KAFALAH) to its valued customers. Where the FMFB-A provides different types of bank guarantees on behalf of its customers.
What is a bank guarantee?
A bank guarantee is an assurance that a bank provides a contract between two external parties an applicant and a beneficiary.
What is Kafalah bank guarantee?
Kafalah or guarantee is a concept that is widely used in Islamic banking. A Letter of guarantee is a written commitment from the bank to pay the value of the Letters of Guarantee to the payee upon the latter’s first request regardless of any claims on the part of the client during the term of validity of the Letters of Guarantee.
Kafalah is a bilateral contract of guarantee where one party agrees to stand in the place of a debtor before his or her creditors.
Currently, FMFB-A is offering the following Islamic Guarantees to their valued customers:
- Bid Bond Guarantee
- Performance Guarantee
Bid Bond Guarantee
A Bid Guarantee is usually provided before/during the bidding process by the applicant to the project owner. Bid Guarantee serves to guarantee that. Should the bidder be awarded the contract which is announced by the beneficiary for bidding, the bidder will be in the position to furnish the guarantees required under the contract.
Performance Guarantee
Performance guarantee is issued on behalf of constituents assuring their performance as per the contract entered into, the beneficiary can seek reparations from the bank for non-performance of the obligation as laid out in the contract. Should the counterparty fail to deliver the services as promised, the beneficiary will claim their resulting losses from non-performance to the guarantor – the bank.
How to apply for a bank guarantee
- Have an active bank account in which you are applying for a bank guarantee.
- Fill out a request letter/customer offer specifying the amount, currency, duration, account number, and state the purpose of the guarantee.
- Project details/Shartnama/offer letter.
- Updated company license.
- Power of attorney (In case of absence of one party) optional.
- Company last three years Financial report (optional).
- Cash Margin 100%.