Document background
The Advance Bank Guarantee is a fundamental financial instrument in Saudi Arabian commercial transactions, particularly utilized in construction projects, government contracts, and large-scale commercial dealings. This document is required when a party (typically a contractor or supplier) receives advance payments and needs to provide security to the paying party. The guarantee is issued by a Saudi bank or a foreign bank operating through a Saudi correspondent bank, ensuring compliance with both Saudi Central Bank (SAMA) regulations and Shariah law principles. The document includes specific details about the guaranteed amount, validity period, conditions for calling the guarantee, and payment mechanisms. It serves as a risk mitigation tool, providing assurance to the beneficiary while enabling the applicant to receive advance payments necessary for project execution.
