What is Purchase Owned BG and why it is required?

The bank has his own scoring and analytical process of decision making to grant the bank guarantee.  The purchase owned BG is a not changeable document, because it is different from all the other documents and this is issued by the bank to the beneficiary. Over the last few years, the liberalization programmed in India has resulted in dramatic structural changes in several industries. The recent banking instrument policies of the government of India and the Reserve Bank of India have set the stage for a similar situation in the banking industry.

• Competitive advantage in the Indian banking industry has been historically determined by factors such as size, branch or distribution capability, and artificial barriers to entry arising from the archaic credit delivery process.
• This has helped some of the older players in maintaining a prominent position in the industry despite their relative inefficiencies.
• This however is all set to change as the trend of new policies is to fundamentally alter the basis of competitive advantage in Indian banking.
• While much has been said and written about the merits of several individual policy measures, the fundamental conceptual changes that have been set in motion appear to be largely ignored.
• This is the promise made by bank on behalf of someone for specific amount of money lended.
• Import and export of the transactions is main thing to be handling in banking instrument.
• It is required for good business to make all the transaction on time always.

The agreement is required in order to make every document secured by the bank.  Financing is not always easy to start with. Standby letters of credit help all the businesses to go through a reliable process in their tough situations therefore it is preferred by the SBLC.

Purchase owned BG is a guarantee of payment by the bank and the direction of the new policies is to establish a level playing field between various components of the industry and remove barriers to entry and exit.

The creation of the term money market, the changes in the credit delivery mechanism, the flexibility in the credit assessment process and the diversification of the sources of money external commercial borrowings, various local debt instruments collectively will change the factors that determine survival, growth and profitability in this competitive industry.