My client company has applied for Bank Guarantee to be issued in favour of Housing Society(for Redevelopment purpose) of 1 Crore for 2 years which will keep on decreasing as the society redeveopment works proceeds.
Eg., Bank Guarantee will decrease by 25 lacs after 6 months work and by further 25 lacs after 6 months and so on.
The bank manager has told they will be collecting their service charges in adavnce on entire 1 crore for period of 2 years. But the amount of Bank Guarantee as mentioned above will keep on decreasing as the works complete. My query is whether the Bank is correct in charging us on entire 1 crore instead of charging on proportioante basis