This ensures the payment will be made as long as the services are performed. A bank guarantee, like a line of credit, guarantees is an undertaking to the beneficiary for a definite payment upon revoke. Unlike a line of credit, the sum is only paid if the opposing party fulfills the stipulated obligations under the contract.
Note: T bank issues the following kinds of financial guarantees:
2% for Bid Security guarantee
3% for Performance guarantee/Mobilization advance
As per security backed/provided and counter guarantees provided.