FX L/G And IR.R L/G

One of the instruments which cause facilitate of goods and services exchange in international commerce is letters of guarantee which are used by contract parties far their commitments .In principal issuing of L/G will be necessary when the parties have no confidence to each other performance.
So, in order to insure of contract party of accurate performance of contract, He/She request of the other party to issue L/G in favour of Him/Her.
According to the 684 article of civil code definition guarantee is, one person undertakes property which is on the others obligation, and committed person is called guarantor, other party is called beneficiary or guaranteed party and third party is called principal or applicant.

FX L/G

Generally FX L/Gs is divided in two group, imported and exported L/Gs.

Imported L/Gs.

Imported L/Gs including tender, performance and advance payment guarantees are issued with requesting seller /foreign contractors and against counter guarantee of correspondent banks in favor of Iranian buyers / employers. About imported guarantees. The credit of seller bank and provisions of counter guarantee are the most significant matters.
For any information about the names of correspondents accepted by this bank and also for receiving of acceptable forms and knowing of necessary provisions in counter guarantee text, please contact with FX L/G of FX operations department phone no 88836437.

Exported guarantees

Exported guarantees are dividend in three groups in terms of subject.

1. Exported guarantees with subject of technical and engineering services issuance.
2. Exported guarantees with subject of goods issuance.
3. Exported guarantees with subject of internal contracts.

All kinds of above mentioned L/Gs are issued in form of tender, performance, advice payment and other kinds of guarantees.

A- Exported guarantees with subject of technical and engineering services issuance

Necessary documents for gaining authorization from central bank of Islamic Republic of Iran :

1. Competency Confirmation of management and planning organization including L/Gs limitation (about tender guarantee ) Address : No24,Ladan st, Molla Sadra st, sheikh Bahai st phone : 804175-6
2. Competency confirmation of Export high council secretariate settled in Iran Export development center(about performance and advance payment guarantees ) including L/G limitation and total amount of contract .
Address : Chamran highway , Shahre-Bazi side administrative Building , Iran Export development center phone :21911
3. Completion specification form of requested L/G in company’s letterhead with signature and company’s authorized stamp ( signature verifying is necessary )
4. Providing copy of tender documents ( about tender guarantees ) and contractor advising copy of reoffering job – sections related to contract specifications and form of payments (about performance bond and advance payment guarantees ) in two copies .
5. Bank’s credit committee confirmation .
6. Providing copies of company’s article of association and the last changes about form of board members, authorized signatures and company’s capital in country’s official Journal .
7. Providing letter of undertaking from applicant stating that if payment amount of L/G to beneficiary comes into question , exporter will oblige to provide L/G amount to FX or IR.R equivalent based on FX selling rate in L/G confiscate day.
8. Providing of securities as follows :
9. Letter of guarantee to USD ten million equivalent :
3 percent cash deposit and 97 percent promissory note .

10. Concerning to excess equivalent USD 10 million to 50 million : 5 percent cash deposit and 95 percent promisory note .
11. Annually commission rate of issuing technical and engineering services L/Gs to USD 50 million ,0.5 percent and excess of it is 0.3 percent .

In case of issuing L/G by correspondence ,providing of commission ( IR.R equivalent ) is on applicant account .

B- Exported L/Gs with subject of issuance goods .

Necessary documents for gaining authorization from central Bank of Islamic Republic of Iran:

1. Competency confirmation of applicant about ability on performing contract or tender subject from relative ministry .
2. Completion specification form of requested L/G in company’s letterhead with signature and company’s authorized stamp ( signature verifying is necessary ) .
3. providing copy of tender documents ( about tender guarantees ) and contract or advising copy of reffering job- sections related to contract specifications and form of payments ( about performance bond and advance payment guarantees ) in two eopies .
4. Providing copies of company’s article of association and the last changes about form of board members authorized signatures and company’s capital in country’s official journal .
5. Credit committee confirmation of Bank Saderat’s Management credit and investment affairs after of taking central bank’s authorization .
6. Providing letter of undertaking from applicant stating that if payment amount of L/G to beneficiary comes in to question , exporter will oblige to provide L/G amount .
7. Amount of securities will be specified according to provisions of issuance L/G by- law and endorsement from banks side and according to company’s abilities and bank’s recognition .
8. Annually commisions rate of this bank for issuing L/Gs of issuance goods, based on mentioned tariff, for tender guarantees will be 1/75 percent and in other cases 2/25 percent .
9. In case of issuing L/G by Correspondence providing of correspondent’s commision (IR.R equivalent ) is on applicant account .

C- Exported L/Gs with subject of internal contracts .

Necessary documents for gaining authorization from central bank of Islamic republic of Iran.

1. Completion specification form of requested L/G in company's letter head with signature and company's authorized stamp (signature verifying is necessary).
2. Providing copies of company's article of association and the last changes about form of board members authorized signatures and company's capital in country's official Journal
3. Providing copy of tender documents (about tender guarantees) and contract or advising copy of referring job-sections related to contract specifications and form of payments(about performance bond and advance payment guarantees )in two copies.
4. Credit committee confirmation of bank's management credit and investment affairs after of taking central bank's authorization.
5. Providing letter of undertaking from applicant standing that if payment amount of L/G to beneficiary comes in to question exporter will oblige to provide L/G amount to FX or IR.R equivalent based on FX selling rate in L/G confiscate day.
6. Amount of securities will be specified according to provisions of issuance L/G by –law and endorsement from banks side and according to company's abilities and banks recognition.
7. Annually commissions rate of this bank for issuing mentioned L/Gs, based on mentioned tariff, for tender guarantees will be 1/75 percent and in other cases 2/25 percent.
8. In case of issuing L/G by correspondence providing of correspondent's commission (IR.R equivalent) is on applicant account.
9. With respect to advance payment guarantees and in cases exporter and beneficiary of guarantee both are Iranian and relative L/C has been opened by other Iranian bank, so issuance of counter guarantee is obligatory, but issuance of performance bond guarantee in form of direct will be authorized after informing and coordinating with opening bank and accepting further actions responsibility by employer.

For more information please contact with FX L/Gs section of FX operations departments settled at head quarters.
In case of entrusting total amount of L/G in form of cash, then taking authorization from central bank or management organization and/or export development center is not necessary.

IRR Guarantees

Kinds of L/Gs which issue by Bank Saderat Iran are as follows:

1. tender (bid )bond guarantee
2. performance bond guarantee
3. advance payment guarantee
4. retention money guarantee
5. release customs guarantee
6. temporary arrival guarantee
7. obligation debt guarantee

Performing procedures and necessary documents

1. Requesting sheet of using guarantee including information about record and field of activity, amount, kind term and beneficiary of L/G
2. Article of association, memorandum of association declaration of companies registration, establishment notice and all of notices about changes inserted in official journal the last minute general assembly.
3. Copy and original of valid commerce card.
4. Identity certificate copy of company's managers and /or real person (applicant of L/G).
5. Financial statements pertaining to the last two years (balance sheet, profit and loss statement, the last examining balance)
6. Copy and original of productive units exploiting license.
7. Copy and original rental agreements of ownership document of activity place.
8. Written announcement of facilities and received L/Gs amount from banking system with separation of every bank and declaration of current debt amount and their maturities.
9. Written request of L/G beneficiary about temporary arrival, obligation debt and release customs guarantees.
10. Concluded contract with beneficiary about performance bond, advance payment and retention money guarantees.
11. Documents related to tender bid (bond) about tender bid (bond) guarantees.

Note for applicants to issuing L/G

1. L/G issuance need to have active current account with bank's branches .
2. Issuing IR.R L/G infavour of governmental institutions is possible and L/G doesn't issue in favour of personal individuals.
3. L/G doesn't issue for taking loan or credit from other institutions.
4. Paying in cash for some percentage of L/G amount according bank’s circular is obligatory.