Banking · Credit & Guarantees
What is the core purpose of a Deferred Payment Guarantee (DPG) in the context of project finance or capital goods acquisition?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To enable the buyer to get credit for customs duty and excise tax.
- 2To assure the seller (beneficiary) that the deferred installments for the goods/machinery will be paid by the bank if the buyer (applicant) defaults.✓
- 3To guarantee the seller's obligation to perform the contract and deliver the goods.
- 4To secure the cash advance paid by the buyer to the seller prior to shipment.
Correct answer
To assure the seller (beneficiary) that the deferred installments for the goods/machinery will be paid by the bank if the buyer (applicant) defaults.
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