ePBG (Electronic Performance Bank Guarantee) is a digital bank guarantee issued by a bank and submitted electronically to the government buyer after you win a contract — as security that you will perform the contract as agreed. It is a mandatory requirement on GeM-awarded contracts and many central/state IT contracts.
ePBG was introduced to replace the traditional physical Performance Bank Guarantee, which required the bidder to obtain a paper BG from their bank, post it to the buyer, and then recover it after contract completion — a process prone to fraud, delay, and loss. ePBG is issued and verified entirely digitally through the PFMS/GeM portal.
The ePBG amount is typically 3–10% of the total contract value. The exact percentage is specified in the tender's Special Terms. For services contracts, 5% is common. For hardware-heavy or high-value contracts, it can go up to 10%.
On GeM, ePBG works as follows: after award, you log into the GeM seller portal, initiate the ePBG, and your bank (from a list of approved banks) issues the BG directly on the GeM platform. The buyer can verify it digitally. The ePBG is held until contract completion and successful delivery acceptance, then released.
Key differences between EMD and ePBG: EMD is submitted before the contract is awarded (with the bid). ePBG is submitted after the contract is awarded (before work begins). EMD protects against bid withdrawal; ePBG protects against contract non-performance. EMD is typically smaller (2–3% of estimated value); ePBG is larger (3–10% of actual contract value).
For IT firms, the ePBG is a working capital consideration — your bank will block the BG amount as a limit against your credit line or require collateral. For large contracts, a 5% ePBG on a ₹50 Lakh contract means ₹2.5 Lakh blocked. This should be factored into your go/no-go assessment alongside the contract timeline.
BidShakti extracts the ePBG percentage and applicable conditions from every tender document as part of its AI analysis. The Decide phase includes a working-capital note — showing the approximate ePBG amount for the contract — so you can assess the cash-flow impact before deciding to bid. Post-award, the document vault tracks your ePBG submission status.
Frequently asked questions
Is ePBG required for all GeM contracts?
ePBG is required for most GeM contracts above a threshold (typically ₹10,000 for goods, ₹2.5 Lakh for services). For lower-value contracts, no PBG may be required. The specific requirement is stated in each tender's Special Terms.
Which banks can issue ePBG on GeM?
GeM maintains an approved list of banks that can issue ePBGs digitally on the GeM platform. Major public sector banks (SBI, BoB, PNB, Canara) and several private banks (HDFC, ICICI) are included. Check the current GeM approved list, as it is updated periodically.
How long does ePBG remain in force?
ePBG validity should cover the contract period plus a claim window — typically the contract period plus 60 days. For multi-year contracts, ePBG may need to be renewed annually. The ePBG is released after the buyer issues a formal completion/acceptance certificate.
What if I cannot submit the ePBG on time?
Failure to submit the ePBG within the stipulated time (usually 7–15 days after award) can lead to contract cancellation, forfeiture of EMD, and blacklisting. Always ensure your bank's ePBG process is ready before bidding on large GeM contracts.
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