Legal aspect of banking

Group name:
 Mayuresh Karnik.
 Vijay Sarda.
 Bipin Titus.
 Rohit Chavan.

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 Overview

Indemnities.
Bank guarantees.
Letter of credit.
Different payments guarantees.
Types of securities.
Types of borrowers.
Types of credit facilities.

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Indemnities
 The word indemnity mean “ to save from loss”.

 Definition of indemnity

A contract by which one party promises to save the other

from loss caused to him by the conduct of the promisor
himself, or by the conduct of any other person.

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Indemnities

Indemnifire:
The person who makes the promise of indemnity.

 Indemnity holder:
The party who is entitled to be compensated by the
indemnifire for any loss caused to the indemnity holder due to
any act on the part of the indemnifire or a third party, is known
as indemnified.

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Features of indemnities contract & guarantee

 Numbers of parties to the contract.

 Contingent risk.
 Nature of liability.
 Number of contract.
 Purpose of contract.

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Rights of an indemnity holder

Can recover all damages incurred or paid

by him.
Recover cost incurred.
Recover sums paid under compromise ,
if any .
Study notes of all subjects\Indemnity-Fo
rm.pdf

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Bank Guarantees
 Definition:

A guarantee given by a bank to third person, to pay him a

certain sum on behalf of bank`s customer, on the customer
failing to fulfill any contractual or legal obligation
towards the third person.

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Bank Guarantees
Beneficiary:
The person to whom the bank gives the
guarantees ,also called the creditor.
Counter guarantee:
A guarantee given by the customer favoring the bank in turn
for the bank giving a guarantee on behalf of the customer to
a third party.

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Types Of Bank Guarantees

 Financial guarantees.
 Performance guarantees.
 Deferred payment guarantees.
 Statutory guarantees.
 Study notes of all subjects\BANK GUARANTEE FORMAT.do
cx
.

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Letter of credit
Definition:

A letter of credit where payment is made after a certain

period on the acceptance by the buyer.

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Types of Letter of credit
 Acceptance credit.
 Revocable credit.
 Irrevocable credit.
 Confirmed credit.
 Transferable credit.

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Deferred payment guarantee

 Deferred payment:
Payment by installments of the price of goods
or services with interest.

 Deferred payment guarantee:

A guarantee issued by a bank assuring payment
of installments & interest on due dates.

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Types of securities
 Good title to securities.
 Easily marketable.
 Price fluctuation.
 Ascertainable.
 Durable.
 Transferable.
 Transportable.

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Kinds of securities
 Real estate.
 Stock & share.
 Debentures.
 Goods.
 Life policies.
 Book debts.
 Fixed deposits.
 Supply bills.

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Types of Borrowers
 Individual.
 Partnership firm.
 HUF.
 Trust & co-operative societies.
 Statutory corporation.
 Companies.
 MOA.
 AOA.

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Types of credit facilities
 Fund based facilities.
 Cash credit/ overdraft.
 Terms loans.
 Bill finance.

 Non fund based facilities.

 Guarantee facilities.
 Latter of credit.
 Underwriting/credit guarantee.

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