Calculate your Bid Security / Bank Guarantee amount, validity and bank charges. Compare cash EMD vs BG option.
| Bid Security Amount @ 2% of tender value | ₹ 0 |
| BG Validity Required Bid validity + 30-day buffer (standard) | 120 days |
| Bank BG Charges @ 0.50% p.a. for validity period | ₹ 0 |
| BG Stamp Duty (est.) Rough estimate only. Stamp duty varies significantly by state — it can be a percentage of the BG value (e.g., 0.1%–0.2%) and may be much higher than shown. Check your state's Stamp Act before finalising costs. | ₹ 200 |
| Total BG Cost (all-in) Charges + stamp (excluding BG principal) | ₹ 0 |
| Factor | Cash / DD / NEFT | Bank Guarantee (BG) |
|---|---|---|
| Upfront cash outflow | Full EMD | Only BG charges |
| Liquidity impact | Capital blocked until result | Capital stays free — bank's credit used |
| Ease of submission | Instant — NEFT/DD | 1–3 working days for BG issue |
| Best for | Small tenders, quick turnaround | Large tenders where cash blockage is costly |
| Factor | Bid Bond / EMD | Performance Bank Guarantee (PBG) |
|---|---|---|
| Purpose | Ensures bidder doesn't withdraw after submitting bid | Ensures contractor completes work as per contract |
| When required | At the time of bid submission | After award of contract, before work starts |
| Typical amount | 2–3% of estimated tender cost | 5–10% of contract value |
| Validity | Bid validity period + 30 days buffer | Contract period + Defect Liability Period (DLP) + buffer |
| Released when | Winners: on signing contract. Losers: after award | After completion + DLP ends (can be 1–2 yrs post-completion) |
| Also called | EMD, Earnest Money, Bid Security | PBG, Security Deposit, Contract Performance Guarantee |
A Bid Bond (also called Bid Security or EMD guarantee) is a financial guarantee submitted with a tender bid. It assures the tendering authority that the bidder will not withdraw the bid during the validity period, and will sign the contract if selected. In Indian government procurement, bid security is typically 2–3% of the estimated project cost, as per GFR 2017 and CPWD/PWD norms.
Instead of depositing full EMD as cash/DD, bidders can submit a Bank Guarantee (BG) from a scheduled commercial bank. The bank issues the BG against your credit facility and charges a commission (typically 0.25%–1% per annum of the BG amount). For large tenders, BG is preferred as it preserves working capital — the actual cash stays in your account while the bank provides the guarantee to the department.
Bid Security Amount = Tender Estimated Cost × Bid Security %
Example: For a ₹1 crore tender with 2% bid security → ₹2,00,000 bid bond required.
The BG must remain valid for the full bid validity period plus an additional 30 days buffer (as per GFR 2017 Rule 170).
BG Cost = BG Amount × (Rate % / 100) × (Validity Days / 365)
SBI and PSU banks typically charge 0.25%–0.50% p.a. for large guarantees to established customers. Private banks may charge up to 1% p.a. Always factor in this cost when deciding your bid price — it is a recoverable cost of tendering.