Lecture
A bank guarantee is a method of securing the performance of obligations, under which a bank, another credit institution, an insurance company or another commercial organization (the guarantor) issues, at the request of the debtor (the principal), a written undertaking to pay the creditor (the beneficiary) a sum of money upon presentation of the beneficiary's demand for payment.
An independent guarantee is a surety provided by the guarantor bank for the performance of its client's monetary obligations; if the client fails to pay on time, the bank will do so .
The principal is the main debtor in the obligation.
Some companies in Ukraine also use a bank guarantee as a way of imposing discipline on a counterparty.
A bank guarantee is an obligation of a bank (the guarantor) to pay a certain sum of money or perform a certain obligation in favor of the beneficiary (the recipient of the guarantee) if the principal (the customer or debtor) fails to fulfill its obligations or breaches the terms of the contract.
A bank guarantee is a financial instrument that provides trust and protects the interests of the beneficiary in a transaction or contract. It ensures that if the principal fails to perform its obligations, the bank will perform them in its place. In this way, a bank guarantee serves as a risk-minimization tool for the beneficiary.
The term "principal" refers to the person or organization that applies to a bank and requests the issuance of a bank guarantee. The principal is the customer or debtor who undertakes to perform certain obligations under a contract or transaction. It asks the bank to issue a guarantee in order to demonstrate its solvency and ensure proper performance of its obligations to the beneficiary.
In the context of a bank guarantee, the principal is the key party that requests, and relies on, the bank's guarantee to establish trust and protect the interests of the beneficiary. If the principal fails to perform its obligations, the bank that issued the guarantee may be required to perform those obligations in its place.
The main types of bank guarantees include:
It is a financial instrument for protecting the interests of the tender organizer. Suppliers may encounter it in two cases:
Bid security. This is the first stage of tenders, when the customer selects those who will perform the contract. Here the money is needed to prove that the company will definitely fulfill the terms of the contract if it wins.
Contract security. This is the customer's insurance that the tender winner will do everything properly and on time. If that does not happen, the money goes to the customer.
In effect, it is a check on the company's reliability. If you are ready to perform a contract worth 10 million rubles, you should not be frightened by security of 1 million rubles (security usually amounts to 10% to 30% of the contract value).
In the Republic of Kazakhstan, the issuance of bank guarantees is governed by the Rules for the Issuance of Bank Guarantees and Sureties by Second-Tier Banks . The accounting of bank guarantees is governed by the Instruction on Accounting for Second-Tier Banks and the Joint Stock Company "Development Bank of Kazakhstan" .
Under the definition of a bank guarantee given in the Civil Code of the Russian Federation, guarantors may be not only credit institutions but also insurance organizations. At the same time, the Federal Law "On Banks and Banking Activity" classifies the issuance of bank guarantees as a banking operation , that is, a transaction that may be carried out only by credit institutions on the basis of a license obtained from the Central Bank of the Russian Federation. As a result of this conflict, bank guarantees issued by insurance companies may be declared invalid, and their employees may face criminal liability for illegal banking activity.
The expediency of resolving this contradiction in favor of insurance companies has been recognized both by representatives of the academic community and by representatives of the legislature: on December 22, 2009, V. M. Reznik, Chairman of the State Duma Committee on Financial Markets, introduced a bill providing for changing the name of the bank guarantee to "payment guarantee" and moving it from the category of banking operations to the category of "other transactions of credit institutions" (with corresponding amendments to a number of Codes and Federal Laws). Later, on May 11, 2010, V. M. Reznik withdrew the bill.
The executive branch demonstrated a different approach to resolving this conflict, siding with the banking sector: under the bills submitted by the Government of the Russian Federation on December 4, 2009 [10], it is proposed to amend the Civil Code of the Russian Federation to limit the range of persons entitled to act as guarantors to banks and other credit institutions only, and also to remove from the Federal Law "On the Organization of Insurance Business in the Russian Federation" the sole mention of bank guarantees issued by insurance organizations. At present, the Government's bills are under consideration in the State Duma of the Russian Federation[11].
In addition, the President of Russia can be expected to introduce, in the near future, a bill likewise intended to change the range of persons entitled to act as guarantors. This step is provided for within the implementation of the Concept for the Development of Civil Legislation of the Russian Federation, prepared by order of the President of Russia[12] by the Council under the President of the Russian Federation for the Codification and Improvement of Civil Legislation, together with the Private Law Research Center under the President of the Russian Federation. According to the text of the Concept, the restriction by the Civil Code of the Russian Federation of the range of persons authorized to issue bank guarantees "unjustifiably narrows the scope of use of this instrument and creates difficulties in international trade practice"[13]. The authors of the Concept also state that the name "bank guarantee" needs to be changed to "independent guarantee"[14].
Insurance companies were left with the right to issue bank guarantees, but amendments were made to Federal Law No. 94-FZ under which bank guarantees from insurance companies may not be accepted as security for liability under government contracts. As a result, insurance companies' bank guarantees lost their main purpose and will most likely disappear altogether in the very near future.
Federal Law No. 44-FZ of 2013, which replaced 94-FZ, also left the right to issue bank guarantees exclusively to banks, and the requirements for a bank guarantee issued in accordance with 44-FZ differ from those of 94-FZ in a number of respects .
Russian legislation also recognizes the independent guarantee (which includes the bank guarantee as a subtype) as a method of securing the performance of obligations, under which a bank, another credit institution, an insurance company or another commercial organization (the guarantor) issues, at the request of the debtor (the principal), a written undertaking to pay the creditor (the beneficiary) a sum of money upon presentation of the beneficiary's demand for payment. If the guarantee is issued by a bank or another credit institution, it is called a bank guarantee.
Under an independent guarantee, a bank, another credit institution or an insurance organization (the guarantor) gives, at the request of another person (the principal), a written undertaking to pay the principal's creditor (the beneficiary), in accordance with the terms of the undertaking given by the guarantor, a sum of money upon the beneficiary's presentation of a written demand for payment[15]. An independent guarantee is a surety issued by the guarantor bank for the performance by a client or another person of monetary or other obligations. If these obligations are not performed, the bank that issued the guarantee is liable for the borrower's debts within the limits stipulated in the guarantee. A bank guarantee is issued against appropriate collateral
A bank guarantee is a document issued by a bank and addressed to a specific creditor of an organization.
Under a bank guarantee, the bank assumes an obligation to pay off the company's possible debt to the creditor at the creditor's demand, upon the occurrence of specifically defined conditions.
In doing so, the bank undertakes to pay the creditor a fixed, previously agreed sum.
The peculiarity of such an agreement is that at the time the bank guarantee is issued, the organization does not yet have the obligation itself to the creditor, that is, the creditor is a potential one.
Moreover, in the future, a debt for purchased goods, work or services may never arise at all.
The main advantages of a bank guarantee are:
In addition, a bank guarantee can be regarded as an extra incentive to fulfill the obligations assumed under a contract (e.g., to deliver goods, perform work or provide services).
As a rule, this happens if the company does not inspire trust. For example, a supplier has undertaken to perform a contract worth 100 million rubles, but its annual turnover is 100 thousand rubles a year. This will arouse suspicion. In such a case, a surety can help. But this usually happens only if the company is a "subsidiary" of some large corporation.
There are cases when banks refuse because of inaccurate information in the documents. For example, the company fails to state that the business has taken out loans or borrowings.
There are also fraudulent schemes. This is when a bank guarantee is needed and a so-called "fixer" appears. For a certain price, he promises a guarantee from a particular bank, but simply disappears. Or unscrupulous intermediaries arrange things so that several banks refuse the company (they draw up the application incorrectly), but one bank will definitely grant the guarantee for an increased commission. So choose carefully those who help with the paperwork.
The cost of a bank guarantee is included in the cost of the asset in connection with whose purchase or creation the bank guarantee was obtained.
Transactions for obtaining a bank guarantee are reflected in accounting as follows:
Debit 76 Credit 51
- the amount of the fee to the bank for issuing the guarantee has been transferred;
Debit 08, 10, 20, 41, etc. Credit 76
- the guarantee of payment under a contracting or supply agreement received from the bank has been included in the cost of the asset.
Such entries are made when forming the cost of all inventory items.
Services for the provision of a bank guarantee are classified as banking operations.
The cost of such a service is not subject to VAT (see Clause 8, Part 1, Article 5 of Federal Law of 02.12.1990 No. 395-1 "On Banks and Banking Activity", Sub-clause 3, Clause 3, Article 149 of the Tax Code of the Russian Federation, Letter of the Federal Tax Service of Russia of 17.05.2005 No. MM-6-03/404@).
Thus, the credit institution does not charge VAT on the bank's fee to the organization for issuing the guarantee.
The issuance of bank guarantees is classified as a banking operation (Clause 8, Article 5 of Federal Law of December 2, 1990 No. 395-1 "On Banks and Banking Activity").
In this case, expenses related to payment for bank services may be recognized either:
a) as part of other expenses related to production and sales (Sub-clause 25, Clause 1, Article 264 of the Tax Code of the Russian Federation), or
b) as part of non-operating expenses, as costs of activities not directly related to production and (or) sales (Sub-clause 15, Clause 1, Article 265 of the Tax Code of the Russian Federation).
Thus, an organization is entitled to determine independently to which group it will assign the expenses for payment of the bank's services for providing a bank guarantee, in accordance with Clause 4 of Article 252 of the Tax Code of the Russian Federation.
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