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How do banks profit on 'bank guarantees' given to customers?

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Bank guarantee is given by bank only to those customers who have good credit history . Bank makes profit by commission which it earn from its customer. Bank guarantee is a guarantee on the behalf of a customer to third party that if the customer defaults in payment then bank will pay the outstanding amount to third party. read more

Me too. I was really disappointed when I needed my company’s first commercial bank loan to finance receivables of more than $1 million—from well-known distributors no less—and we ended up having to sign a lien on our family home to get the loan. read more

Retail and commercial banks need lots of customers to deposit their money with them, as the banks use these deposits to earn enough money to stay in business. To encourage people to keep their money in a bank, the bank will pay them a small amount of money (interest). read more

Most bank guarantees come with a fee equal to a small percentage amount of the entire contract, normally 0.5% to 1.5% of the guaranteed amount. Applying for a Bank Guarantee Bank guarantees are not limited to business customers; individuals can apply for them as well. read more

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