Financial Instruments

BG or MT760 is an irrevocable commitment issued by a bank on behalf of their customer. Whereas they have entered into a contract to buy goods or perform their project. BG is a promise from buyer to meet all financial obligations to the supplier in the event of default. In other words, a BG is an undertaking of a bank on behalf of its customer. Furthermore, BG often helps firms conduct their business with parties they would never get the chance to deal with.

Many suppliers will often choose to do business with customers that have a BG because it eliminates the fiscal risk. BG reduces their fear of not receiving the proper payment for the goods that they are selling.