Retention Guarantee, it is a type of Bank Guarantee used in construction projects, infrastructure projects, and large-scale projects to replace the retention amount held by the beneficiary (usually the Employer or Project Owner) during the project's execution. This guarantee ensures that the Contractor fulfils their obligations during the defect liability period or maintenance period after the project is completed.

Purpose of the Retention Guarantee 
In many contracts, a portion of the payment (usually 5 to 10 percent) is retained as a "retention amount" by the Beneficiary. This amount acts as security to ensure that the Contractor addresses any defects or issues that arise during the defect liability period. Instead of holding cash, the beneficiary may accept a retention guarantee issued by a Bank. This allows the Contractor to receive the full contract amount as an advance, while still providing the necessary security for the Beneficiary.