LEGAL AND REGULATORY ASPECTS OF BANKING (LRAB) 

Unit - 13: Deferred Payment Guarantee

​Legal & Regulatory Aspects of Banking - Deferred Payment Guarantee
Unit - 13 : Deferred Payment Guarantee
Deferred Payment Guarantee is a guarantee that indicates that deferred ( postponed ) payments . In short it is called as " DFG". 

Purpose of deferred Payment Guarantee :
When import or export of raw material or consumer goods is made ,the payments is done either immediately or within 360 days . This is called Short Term. 
In Deferred payment guarantee,a third party , mostly bank or Financial Institution, guarantee the payment of the installments . This guarantee ensures timely payment to the seller/ Exporter , failing which , the guarantee can be invoked and payment received. 

Method of Payment :
1. Advance payment of 10% -15% of the price of goods made  by buyer .
2. Another 10-15% on receipt of documents under LC
3. The Balance amount is paid in installments spread over a period of 1 -7 years, which is secured by a " Defered Payment Guarantee"

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