Guarantee bond executed by bank :

The provisions governing the execution of bonds by banks are as follows:

(i) When the State Bank of India or a scheduled bank gives a guarantee for a registered person with or without deposit of security, the guarantee bond should provide a period of validity and an extra period during which obligations arising during the period of validity to be enforced. The time limit for enforcement of obligation should be at least two years.

(ii) Where there is a need for extension of the period of validity of bank guarantee furnished by the bank on behalf of a party in pursuant to an order of an original or appellate authority or any other reasons, it should be done by means of supplementary deed of bank guarantee on a stamp paper.