The rule on "extend or pay", where the beneficiary makes a demand close to the expiry date and permits the guarantor to extend the validity of the guarantee as an alternative to immediate payment, has also changed. The guarantor now has the option to pay up immediately or to suspend payment for a period not exceeding 30 calendar days following receipt to allow negotiation. Previously it had no choice but to suspend payment while consulting with the applicant in relation to the extension. The guarantor now has a discretionary right to refuse to grant any extensions, "even if instructed to do so" by the applicant and may simply proceed to pay. Banks will welcome this change.
Process steps handled by the bank to initiate a new claim for an extend/Pay
Process steps handled by corporate either to pay or extend
After Corporate approval, the bank user releases the extension/payment