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Para 6.1.3 - Bank Guarantees | KartavyaDesk

Consultancy Manual

Original Rule Text

a) BG shall be as per the prescribed formats. b) The BG contains the name, designation and code number of the Bank officer(s) signing the guarantee(s); c) The address and other details (including telephone no.) of the controlling officer of the bank are obtained from the branch of the bank issuing the BG (this should be included in all BGs); d) The confirmation from the issuing branch of the bank is obtained in writing through registered post/speed post/courier/ official email-id of the Bank/ SFMS on the official portal of the procuring entity. The bank should be advised to confirm the issuance of the BGs specifically quoting the letter of Procurement Entity on the printed official letterhead of the bank indicating address and other details (including telephone nos.) of the bank and the name, designation and code number of the officer(s) confirming the issuance of the BG; e) Pending receipt of confirmation as above, confirmation can also be obtained with the help of responsible officer at the field office, which is close to the issuing branch of the bank, who should personally obtain the confirmation from issuing branch of the bank and forward the confirmation report to the concerned procurement entity.

What This Means

Para 6.1.3 of the Manual for Procurement of Consultancy Services outlines the crucial steps for handling Bank Guarantees (BGs). A Bank Guarantee is essentially a promise from a bank to pay a certain amount if the consultant fails to fulfill their contractual obligations. This rule ensures that the BG is legitimate and enforceable, protecting the government's interests. It applies whenever a consultancy contract requires a BG as security. It directly affects government departments procuring consultancy services and the consultants providing those services, as both parties must adhere to these verification procedures.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •BGs must be in the prescribed format.
  • •The BG must include the name, designation, and code number of the bank officer(s) signing it.
  • •Contact details of the bank's controlling officer must be included in the BG.
  • •Confirmation of the BG's issuance must be obtained directly from the issuing bank branch in writing.
  • •Alternative confirmation methods are allowed if direct confirmation is delayed.

Practical Example

The Ministry of Urban Development is hiring 'City Solutions Pvt. Ltd.' for a smart city project. The contract requires a Bank Guarantee of ₹50,00,000. According to Para 6.1.3, the Ministry's procurement officer, Mr. Sharma, receives the BG. He checks that it's in the correct format and contains the details of the signing bank officer, Mr. Verma, including his designation and code. Mr. Sharma then uses registered post to send a letter to the issuing branch of the bank, requesting confirmation of the BG's authenticity. He also notes the address and phone number of the bank's controlling officer from the BG itself. Once he receives the confirmation letter from the bank, the BG is considered valid.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What happens if the BG is not in the prescribed format?▼
The BG should be rejected and the consultant should be asked to provide a BG in the correct format.
Why is it important to get confirmation from the issuing bank branch?▼
To prevent fraud and ensure the BG is genuine and enforceable.
What if the confirmation from the bank is delayed?▼
Para 6.1.3 allows for alternative confirmation methods through a responsible officer at a nearby field office.
What details of the bank officer are required on the BG?▼
The name, designation, and code number of the bank officer(s) signing the guarantee.
What is SFMS and why is it mentioned?▼
SFMS stands for Structured Financial Messaging System. It's a secure communication network used by banks in India. Using SFMS for BG confirmation adds an extra layer of security.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 6.1.3 of the Manual for Procurement of Consultancy Services, what information about the bank officer signing the Bank Guarantee (BG) must be included in the BG?

Related Rules

Para 8Manual for Procurement of Consultancy Services, 2025 - Para 8 - Chapter 10 - Annexure 18Para 9Manual for Procurement of Consultancy Services, 2025 - Para 9 - Chapter 10 - Annexure 18Para 1.10.2Manual for Procurement of Consultancy Services, 2025 - Para 1.10.2 - Chapter 1Para 1.11Manual for Procurement of Consultancy Services, 2025 - Para 1.11 - Chapter 1Para 1.13Manual for Procurement of Consultancy Services, 2025 - Para 1.13 - Chapter 1

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