Shipping guarantees are only issued in respect of missing bill of lading where the guarantees relate to documents which are definitely expected to come forward through the bank. In the absence of already approved credit facilities under which a shipping guarantee may be issued, all applications for shipping guarantees are subject to a credit appraisal of the applicant. Where the standing of an applicant does not justify clean credit facilities, a cash margin (normally 100%) is taken. In all cases, it is essential that banks satisfy themselves from appropriate and reliable documentation regarding the value of the cargo prior to the issue of the guarantee. Shipping guarantees may not be issued in respect of cargo under lien to another bank.
Upon clearance of goods, the guarantee must be returned to the issuing bank for cancellation. It should not remain outstanding for more than one month from the date of its issuance. It is customary, where bank would initiate an enquiry into the reason for its non-return immediately after expiry date of the guarantee.