Underlying contract
Applicant and beneficiary agree the commercial obligation and the required guarantee type.
Procedures · Lifecycle guide
Demand Guarantee Procedure
A typical direct or indirect demand-guarantee lifecycle from application to expiry or demand.
Guarantee wording
Parties agree amount, expiry, demand requirements, governing rules and whether a local guarantee is needed.
Application to bank
Applicant/instructing party asks its bank to issue or arrange the undertaking.
Bank approval
The bank checks credit facility/cash cover, KYC, sanctions, country risk, purpose, wording and fees.
Direct or indirect route
For a direct guarantee, the guarantor issues to/advises the beneficiary. For an indirect structure, a counter-guarantee may support a local guarantor.
Issue / MT760 where SWIFT is used
The approved guarantee or counter-guarantee is issued. MT760 is the Category 7 message commonly used for a demand guarantee/standby undertaking.
Beneficiary review
The beneficiary checks issuer, amount, expiry, demand wording, rules and any required amendment.
Outstanding period
The guarantee remains available according to its terms. Amendments may be communicated using MT767 where applicable.
Demand or expiry
If a trigger occurs, the beneficiary presents the required demand/documents before expiry; otherwise the guarantee expires/reduces/cancels according to its terms.
Examination and payment
The guarantor examines the presentation. A complying demand is honoured according to the undertaking and applicable rules.
What can change from bank to bank?
The commercial objective may be similar while the bank’s internal route differs. Credit approval, collateral, compliance review, legal wording, message choice, fees and cut-off times can all vary. Always distinguish those bank-specific steps from the incorporated rules and the purpose of the SWIFT message.
Reviewed: September 2026Standards and bank policy can change.How MyGreed classifies proceduresOfficial-source directory
What kind of requirement is this?
Do not call every step “standard.”
The guarantee may instead use other rules/law; read the undertaking.
Message standards communicate issue/amendment; they do not replace the guarantee terms.
Each bank decides whether it will issue/counter-guarantee and on what collateral/fees.
The commercial sequence and wording can vary by banks and country.
Procedure check0 / 1 answered · 0 correct
Check 1
Does every bank guarantee need a counter-guarantee?