Bank Guarantees (BG)

Bank Guarantee (BG) is an irrevocable commitment by a bank to pay an agreed sum to the beneficiary in the event that the party requesting to the Guarantee fails to perform its obligations or liability to the beneficiary. At Affin Bank we are also able to provide you with immediate BG issuance on adhoc basis against Cash Margin or Fixed Deposit as collateral.

BG constitutes a formal and trustable source of undertaking to both buyer and seller, besides BG also allows customer to ease their cash flow in replacement for deposit requirement. Guarantees can be issued for various purposes. The main types are:

  • Tender / Bid Guarantee/Bond
    • This Guarantee/Bond is issued when you are going to bid for a tender of a contract and usually short term in nature.
  • Performance Guarantee/Bond
    • Performance Guarantee/ Performance Bond is issued in relation to the performance of the contractor against their obligations /works under the contract. The BG amount is normally about 2.5% or 5% of the contract value and valid until the completion of the contract/work or until the expiry of the defect liability / warranty period.
  • Advance Payment Guarantee
    • Issued to cover the advances made by the beneficiary to the applicant in which if the applicant fails to perform the contract, such advances made earlier will be claimed upon.
  • Security Deposit Guarantee
    • Security Deposit Guarantee is used as a deposit by the applicant to cover payment such as to Tenaga Nasional, Telekom, and Customs and also for the supply of goods on credit term.


  • BG must have a specific expiry and claim period
  • Must have specific amount
  • Format must acceptable to the bank
  • Unconditional in nature
  • Different types of BG include Tender, Performance, Security Deposit, Advance Payment and Standby Letters of Credit


  • Formal and definite source of undertaking for both applicant and beneficiary as the guarantee is issued by the bank
  • Allows customer to ease their cash flow in replacement for deposit requirement


  • Malaysian incorporated companies with a Bank Guarantee requirement e.g. contractors, manufactures, trading companies etc.


  • Approved BG facility by the bank
  • Security / collateral may be required to support application for BG Facility

How to Apply

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  Contact our Call Centre at +603-8230 2222 or visit the nearest Business Centre nationwide today.

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