Electronic Letter of Guarantee for Banking System

Abstract

Guarantees are generally used to cover the risk of a contracting party failing to fulfill its agreed obligations (such as non-payment or delivery). Collateral can be used in open account trading as it complements collection efforts and documentary credits. A guarantee is a type of protection that one party imposes on the other party in a transaction in the event that the second party fails to fulfill its obligations according to predetermined specifications. In this case, the first party receives a predetermined amount of compensation from the guarantor, while the second party is required to return the payment. This paper provides an indepth analysis of the areas of automating bank guarantees in electronic form and provides a comprehensive analysis of all procedures and processes related to bank guarantees management.. Through this service, suppliers will be able to issue the bank guarantee electronically and conduct all operations related to the management of the bank guarantee without need to visit the bank, which contributes to increasing operational efficiency, eliminating fraud and contributing to digital transformation. This service will also contribute to reducing costs and limiting waste of time and effort. It will also allow the beneficiaries to easily follow up all related operations, including extension, cancellation, liquidation and confiscation of guarantees without the need of human intervention.