Bonds & Guarantees
Tender Bond
Issued in support of customer's tender as assurance of the intention of the customer to sign the contract if the customer's tender is accepted.
In the event of default (i.e. failing to accept the contract if awarded to the tenderer) the guarantor provides within the limits of the guarantee to make payment of a stated sum of money to the beneficiary.
How will my business benefit?
If you were tendering for the supply of goods or construction of a project the employer (buyer) would normally request a 10% cash deposit to enable you to tender for the contract. If the bank issues
the Tender Bond on your behalf, the bank undertakes to accept responsibility for the financial obligation and therefore a cash deposit normally becomes unnecessary.
Prospective Customers
All corporate customers involved in tendering or supply of goods to government and other major organizations, also foreign companies aiming to tender for work in Malawi.
Special Requirements
The customer needs to set a limit for such obligations, with his/her Service Centre Manager or Account Relationship Manager and a counter indemnity from the customer needs to be taken.
Performance Bond
A performance bond is given in support of a customer's obligation to fulfill a contractual commitment, normally required after a customer has been awarded a contract to perform.
How will my business benefit?
When a performance bond is issued on behalf of our customer, the bank guarantees to the third-party (buyer or employer) that the bank will pay any claims that may arise due to non-compliance or faulty completion by the supplier or contractor, up to the total amount of the amount guaranteed.
In the absence of this guarantee, customers who are awarded contracts after tendering are required to put cash up-front, thus risking straining their cash flow.
Prospective Customers
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All corporate customers involved in tendering or supply of goods to government and other major organizations.
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Foreign companies wishing to tender for work in Malawi. In this case, we normally require a counter guarantee from an overseas Bank.
Special Requirements
Like all types of guarantees/bonds, the customer needs to agree a limit with the Bank.
Advance Payment Guarantee
This type of guarantee is available to our customers who tender for major contracts.
When a contract is awarded there is usually an arrangement for the contractor to make drawdowns under the contract or to obtain advance payments.
The normal advance payment is 10% of the contract amount but may be more and payable at specified stages of project implementation.
If the buyer/employer wishes to have security for his advance payments, he will ask the supplier/contractor for a guarantee that the monies being advanced to the supplier/contractor will be re-paid within the validity of the contract.
How will my business benefit?
The advance payment guarantee acts as security to enable you to obtain cash in advance to enable you to finance your project, and then complete it as per the terms of the contract.
Prospective Customers
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Corporate customers engaged in major supply of goods or construction contracts.
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Overseas or local contractors wishing to bid for major construction projects in Malawi, such as road construction.
Special Requirements
Like all types of guarantees/bonds, the customer is required to set a limit for guarantees/bonds with his/her Branch Manager or Account Relationship Manager.
Retention Money Guarantees
Given in support of contracts, which call for, say, 10% of each payment to be withheld until the project is completed and accepted by the contracting buyer - sometimes up to one year after the completion date.
How will my business benefit?
The guarantee enables the contractor to receive the total amount of each payment, whilst assuring the buyer that the funds will be refunded if the contractor is not able to fulfill his/her obligation or there is defective workmanship, repairs will be done at no cost to the buyer.
Prospective Customers
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Corporate customers who are involved in major construction work
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Overseas or local contractors involved in major construction work.
Customs Guarantee
Customs authorities normally request that import duty or customs duty should be paid for either in cash or bank certified cheques.
Customers wishing to pay duty by means of their own cheques can obtain a guarantee from the bank. In this way the bank undertakes to Malawi Revenue Authority (MRA) that it will honour all correctly drawn cheques up to a certain limit per day.
How will my business benefit?
Customers avoid the risk of carrying large amounts of cash for customs duty, or the expenses of purchasing a Bank certified cheque each time a cheque is required.
Prospective Customers
All customers who import and have trading licenses.
Special Requirements
Customers have to set up a guarantee limit with the bank.
Other Types of Bonds, Guarantees
Our bank is able to establish other special guarantees upon request.
These include:
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Bonded warehouse
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Manufacturers rebate
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Surtax bond
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Temporary importation of goods for re export
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Immigration guarantees
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Shipping guarantee
Some of the specialized bonds are pre-printed on Malawi Revenue Authority (MRA) documents and customers must first establish with MRA whether the guarantee is to be issued on the Bank's format or MRA special forms. It is usually a requirement that the bonds/guarantees issued in favour of government or MRA are executed under seal.
