What is the difference between Bank Guarantee and Letter of Credit

Question

Accepted Answer

Bank Guarantee is a guarantee from a bank that a borrower will fulfill their financial obligations, while Letter of Credit is a payment method where the bank guarantees payment to the seller.

Bank Guarantee is a guarantee provided by a bank to a beneficiary in case the applicant fails to fulfill their obligations.
Letter of Credit is a payment method where the bank guarantees payment to the seller upon presentation of specified documents.
Bank Guarantee is more of a financial security for the beneficiary, while Letter of Credit is a payment mechanism for the seller.
Bank Guarantee is typically used in construction projects, international trade, etc., while Letter of Credit is commonly used in international trade transactions.

What is the difference between Bank Guarantee and Letter of Credit

Top Acuity Knowledge Partners Delivery Manager interview questions & answers

Popular interview questions of Delivery Manager

Top HR questions asked in Acuity Knowledge Partners Delivery Manager