Distinguish between the following: Financial Bank Guarantee and Performance Bank Guarantee.

Financial Bank Guarantee A financial guarantee assures repayment of money. The banker issues guarantee in favour of a government department against caution deposit or earnest money to be deposited by bank's client. At the request of his customer, in lieu of a caution deposit/ earnest money, the banker issues a guarantee in favour of the government department. This type of guarantee helps the bank's customer to bid for the contract without depositing actual money. In case, the contractor does not take up the awarded contract, then the government department would invoke the guarantee and claim the money from the bank. Performance Bank Guarantee A performance guarantee provides an assurance of compensation in the event of inadequate or delayed performance on a contract. Performance Guarantees are issued by banks on behalf of their clients. In performance guarantee, the bank issues on behalf of his client to assure the third party to complete some work on time or as per the terms of the contract between the parties. If the work is not completed as per the terms of the contract, then the third party can request the bank to invoke the bank guarantee and make payment for default. Performance Bank Guarantees are issued guaranteeing due performance of contract or obligation of the borrower under the contract. In the event of non-performance of obligation in terms of the contract, the bank assumes monetary liability up to the amount specified in the Guarantee.