What is the cash margin on a letter of guarantee and how is it set? | Ask Banky

Editor-in-Chief Mohamed Salah

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Editor-in-Chief Mohamed Salah

What is the cash margin on a letter of guarantee and how is it set?

Asked by Banky team 2 months ago 2 views
Banky team Reviewed editorial answer

The cash margin is a percentage of the value of the letter of guarantee that the bank freezes (blocks) in the company's account as security.

The percentage ranges from 0% up to 100%; companies with strong creditworthiness may obtain a letter secured wholly or partly against the credit facilities granted to them, while new companies are required to provide a 100% cash margin.

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