Bank Guarantee Bond Template for Indonesia

The Bank Guarantee Bond is a crucial financial instrument in Indonesian business transactions, particularly in sectors requiring performance or payment security. This document is typically used when a party needs to provide financial security for their obligations in commercial transactions, construction projects, or tender participations. The guarantee bond, structured under Indonesian law and banking regulations, provides the beneficiary with a direct claim against a bank, offering stronger security than a corporate guarantee. It must comply with Bank Indonesia and OJK regulations, including specific requirements for format, content, and execution. The document includes essential details such as guarantee amount, validity period, claim conditions, and payment terms, while incorporating necessary risk management provisions required by Indonesian banking regulations.

1. Parties: Identifies the three key parties: the Bank (Guarantor), the Principal (Applicant), and the Beneficiary

2. Background: States the underlying transaction or obligation being guaranteed and the purpose of the guarantee

3. Definitions: Defines key terms used throughout the guarantee bond

4. Guarantee Amount: Specifies the maximum amount of the guarantee and currency

5. Scope of Guarantee: Details the specific obligations or performance being guaranteed

6. Duration and Validity: Specifies the effective date and expiry date of the guarantee

7. Conditions for Claims: Sets out the conditions and procedures for making a claim under the guarantee

8. Payment Terms: Describes how and when payment will be made upon a valid claim

9. Bank's Obligations: Details the specific obligations and commitments of the guarantor bank

10. Governing Law and Jurisdiction: Confirms Indonesian law as governing law and specifies jurisdiction for disputes

11. Notices: Provides details for formal communications between parties

12. Execution: Signature blocks and execution formalities