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Para 6.1.6 - Bank Guarantees | KartavyaDesk

Goods 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/ 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 Procuring Entity on the printed official letterhead of the bank indicating the 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 the responsible officer at the field office, which is close to the issuing branch of the bank, who should personally obtain the confirmation from the issuing branch of the bank and forward the confirmation report to the concerned procuring entity.

What This Means

Para 6.1.6 of the Manual for Procurement of Goods, 2017, outlines the procedures for accepting Bank Guarantees (BGs) during government procurement. Think of a Bank Guarantee as a promise from a bank to pay a certain amount if a supplier fails to fulfill their contractual obligations. This rule is all about ensuring that the BG you receive is genuine and enforceable. It's designed to protect the government from fraudulent or invalid BGs. This rule applies whenever a procuring entity (a government department or agency buying goods) requires a supplier to provide a Bank Guarantee as part of the procurement process. It directly affects government employees involved in procurement, suppliers bidding on government contracts, and the banks issuing the guarantees.

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.
  • •The procuring entity must obtain the address and contact details of the bank's controlling officer from the issuing branch.
  • •Confirmation of the BG's issuance must be obtained in writing from the issuing bank via registered post/speed post/courier/SFMS on the official portal of the procuring entity.
  • •Pending written confirmation, a responsible officer near the issuing branch can obtain confirmation and forward it to the procuring entity.

Practical Example

The Ministry of Electronics and Information Technology (MeitY) is procuring 5000 laptops from 'Tech Solutions Pvt. Ltd.' Tech Solutions is required to submit a Bank Guarantee of ₹50,00,000. Ms. Sharma, the procurement officer at MeitY, receives the BG. Following Para 6.1.6, she ensures the BG is in the correct format and contains the required details of the signing bank officer. She then sends a letter via registered post to the issuing branch of 'Secure Bank' requesting confirmation of the BG's authenticity. While waiting for the written confirmation, she also asks Mr. Verma, a MeitY officer stationed near the Secure Bank branch, to personally visit the bank and obtain confirmation, which he then forwards to Ms. Sharma. Only after receiving both confirmations does Ms. Sharma proceed with accepting the BG.

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 bank refuses to confirm the BG?▼
If the bank refuses to confirm the BG, it should be considered invalid. The procuring entity should then request the supplier to provide a valid BG from another bank or explore other acceptable forms of security as per the procurement guidelines.
Can we accept a scanned copy of the BG confirmation?▼
While a scanned copy might be useful for preliminary verification, the rule explicitly requires original written confirmation through registered post/speed post/courier/SFMS on the official portal of the procuring entity. The scanned copy should not be considered as a substitute for the original.
What is SFMS and why is it mentioned?▼
SFMS stands for Structured Financial Messaging System. It's a secure platform used by banks for interbank communication. Using SFMS for BG confirmation adds an extra layer of security and authenticity.
Is it mandatory to send a field officer to the bank for confirmation if we've already sent a letter?▼
Sending a field officer is not mandatory if you receive the written confirmation through registered post/speed post/courier/SFMS promptly. The field officer option is provided as an alternative to expedite the confirmation process, especially when time is a constraint.
What details should the bank include in their confirmation letter?▼
The bank's confirmation letter should be on their official letterhead, clearly indicating the address and contact details of the bank, the name, designation, and code number of the officer confirming the issuance, and specifically quoting the procuring entity's letter reference number requesting the confirmation. It should unequivocally confirm the issuance of the BG.

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 6.1.6 of the Manual for Procurement of Goods, 2017, which of the following details MUST be included in a Bank Guarantee (BG)?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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