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DEFERRED PAYMENT GUARANTEE
What is a Deferred Payment Guarantee (DPG)?
A Deferred Payment Guarantee is a non-fund-based credit facility issued by a bank guaranteeing payment of installments on behalf of a borrower who has purchased capital goods or equipment on a deferred payment basis.
What is the primary purpose of a Deferred Payment Guarantee in trade finance?
To guarantee installment payments owed by buyer to seller.
Who are the three parties involved in a Deferred Payment Guarantee?
The three parties are the buyer (applicant/borrower), the seller (beneficiary), and the issuing bank that provides the guarantee for deferred installment payments.
In a DPG arrangement, who is the principal debtor responsible for making payments?
The buyer of capital goods is the principal debtor.
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