Document background
The Guarantor Letter For Bank Loan is a crucial document in Pakistani banking practice, required when a bank needs additional security for a loan facility. This document is commonly used when a borrower's creditworthiness or collateral alone is insufficient to secure a loan, requiring a third party's guarantee as additional security. The letter details the guarantor's unconditional commitment to repay the loan if the primary borrower defaults, specifying the guarantee amount, duration, and enforcement conditions. It must comply with Pakistani banking regulations, including the Contract Act 1872, Banking Companies Ordinance 1962, and relevant State Bank of Pakistan directives. The document is particularly important in both conventional and Islamic banking contexts, often required for corporate loans, SME financing, and personal banking facilities.
