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Para 6.1.3 - Bank Guarantee Verification | KartavyaDesk

Non-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 Non-Consultancy Services focuses on ensuring the authenticity and validity of Bank Guarantees (BGs) submitted by vendors. Think of a Bank Guarantee as a promise from a bank to pay the government if the vendor fails to fulfill their contractual obligations. This rule aims to prevent fraudulent BGs and protect the government's financial interests. It applies whenever a Bank Guarantee is required as part of the procurement process for non-consultancy services, affecting both government procuring entities and the vendors providing those services.

The rule outlines specific steps to verify the BG's legitimacy. This includes checking that the BG follows the prescribed format, contains the necessary details of the bank officers signing it, and provides contact information for the bank's controlling officer. Most importantly, it mandates direct confirmation from the issuing bank branch regarding the BG's issuance. This confirmation process is crucial to avoid accepting fake or altered BGs.

Essentially, this rule is a safeguard against financial risk. By diligently following these verification procedures, government employees involved in procurement can ensure that the BGs they receive are genuine and enforceable, thereby protecting public funds and ensuring the successful completion of projects.

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

Key Points

  • •Bank Guarantees (BGs) must adhere to prescribed formats.
  • •BGs must include details of the signing bank officer(s) and the controlling officer of the bank branch.
  • •Confirmation of BG issuance is mandatory from the issuing bank branch via registered post/speed post/courier/official email-id of the Bank/ SFMS.
  • •Confirmation should specifically quote the Procurement Entity's letter on the bank's official letterhead.
  • •In urgent cases, a responsible officer at a field office can obtain confirmation personally from the issuing branch.

Practical Example

The Department of Rural Development is procuring sanitation equipment from M/s Clean Solutions Pvt. Ltd. As part of the contract, M/s Clean Solutions submits a Bank Guarantee of ₹5,00,000 from Punjab National Bank, Branch X. Mr. Sharma, the procurement officer, ensures the BG is in the correct format and contains the details of the bank officer, Mr. Verma, signing it. He then sends a letter via registered post to Punjab National Bank, Branch X, requesting confirmation of the BG's issuance, quoting the Department's reference number. He also sends the same letter via the official email-id of the bank. Upon receiving the confirmation on the bank's official letterhead, signed by Mr. Verma and stating the BG's details, Mr. Sharma proceeds with the procurement process, confident that the BG is 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 bank doesn't respond to the confirmation request?▼
Follow up with the bank. If there's still no response, consider contacting a higher authority within the bank or rejecting the BG and requesting a new one from a different bank.
Can we accept a scanned copy of the BG confirmation?▼
While a scanned copy can be used for initial verification, the original confirmation received through registered post/speed post/courier/official email-id of the Bank/ SFMS is mandatory for final acceptance.
What if the BG format is slightly different from the prescribed format?▼
Any deviation from the prescribed format should be carefully scrutinized. Consult with the legal department to assess the impact of the deviation on the BG's enforceability before accepting it.
Is it mandatory to use registered post for confirmation, or can we use speed post?▼
The rule allows for registered post, speed post, courier, official email-id of the Bank, or SFMS. Any of these methods are acceptable as long as they provide a verifiable record of delivery and confirmation.
Who is a 'responsible officer' at the field office, as mentioned in the rule?▼
A 'responsible officer' refers to a government employee with sufficient authority and experience, designated by the procuring entity, to liaise with the bank and obtain the necessary BG confirmation. This officer should be familiar with banking procedures and have the necessary communication skills.

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 Non-Consultancy Services, what information MUST be included in a Bank Guarantee (BG)?

Related Rules

Para 3.2Manual for Procurement of Non-Consultancy Services, 2025 - Para 3.2 - Chapter 3Para 4.1.1Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.1.1 - Chapter 3Para 4.2.3Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.2.3 - Chapter 3Para 4.4Manual for Procurement of Non-Consultancy Services, 2025 - Para 4.4 - Chapter 3Para 6.8Manual for Procurement of Non-Consultancy Services, 2025 - Para 6.8 - Chapter 6

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