Full Form of BGC

What is BGC?

Bank Guarantee Commission (BGC) is a fee charged by a bank to issue a bank guarantee (BG) on behalf of a customer. In India, BGC is a common term in trade finance and corporate banking, where companies require guarantees to bid for contracts, secure performance obligations, or obtain credit facilities. The commission is typically calculated as a percentage of the guarantee amount and varies based on the risk profile of the applicant, the tenure of the guarantee, and the bank's policies. BGC is used across sectors such as infrastructure, manufacturing, exporting, and government procurement, where guarantees are mandatory for participation. For banking professionals and students preparing for exams like IBPS, SBI, and RBI Grade B, understanding BGC is important as it appears in questions related to fee-based income, non-fund based facilities, and balance sheet items. Banks classify BGC as a non-interest income source, making it relevant for financial analysis. The concept also ties into letters of credit and other contingent liabilities, which are frequently tested in banking awareness sections. In practice, BGC is mentioned in sanction letters, loan agreements, and trade finance documents, and it directly impacts the cost of doing business for Indian firms.

BGC का फुल फॉर्म

Example

The exporter paid a 1.5% BGC on the performance guarantee submitted to the public sector undertaking.

BGC — frequently asked questions

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