Tender Bank Guarantee

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  • Issuance Procedure For BG

    Our modus operandi is standard banking practices and is transparent as stated below:


    • Client will send us the Filled, Signed and Sealed BG application form (attached below) along with supporting documents like Copy of contract between Applicant and Beneficiary. We will prepare and send the draft of BG as per the application form and the underlying document requirement.
    • Client should conclude with their Beneficiary using the draft provided by us. Once the draft is concluded, Client should send us the following:
    1. Final draft with their sign and seal;
    2. Letter of Interest confirming acceptance for the draft and advising us to proceed further;
    3. Their Bank statement evidencing the availability of funds to cover the issuing cost.
    • Upon receiving the above stated 3 documents, the standard Indemnity Documents to be signed by the individual directors/shareholders, Board resolution to be signed by all directors/shareholders, Bill of Exchange to be signed by the authorized signatory, source of funds to be signed by authorized signatory and application and agreement to be signed by the authorized signatory, all these will be provided to the Client.
    • The Client has to submit the KYC documents as per the list we provide as a part of KYC and AML compliances.
    • Also an eKYC declaration letter will be given to Client, which needs to signed and sealed and sent back to us.
    • Once we receive the Signed eKYC declaration letter, we will issue an invoice of 1,500 USD for eKYC which client needs to pay.
    • Upon receipt of this payment we will release a eKYC link to client
    • Client needs to submit all the signed and sealed filled up documents, on the eKYC link/portal shared by us after which our KYC and Compliance team will review the documents.
    • Our KYC & compliance team will confirm if the submitted documents are in order and if yes, we will issue an invoice to Applicant, from the Bank towards the issuing fees (which is non-refundable after issuance of the instrument to the beneficiary bank)
    • After Client transfers the issuance fees, within 7 – 10 banking days we will get the instrument issued and it will be delivered to the Supplier/Beneficiary bank.

A tender guarantee, also known as a bid bond, is a financial instrument issued by a bank or insurance company on behalf of a contractor or bidder, guaranteeing to the project owner that the bidder will honor their bid and sign the contract if awarded. Tender guarantees are commonly used in procurement processes, especially in construction, government contracts, and large-scale projects, to protect the project owner (buyer) from financial losses if the winning bidder fails to meet their commitments.


Key Benefits of a Tender Guarantee:


1. Increases Credibility of the Bidder

A tender guarantee demonstrates the bidder’s financial reliability and seriousness, as it requires a financial institution to vouch for the bidder’s ability to fulfill contractual obligations. This credibility can strengthen the bidder's position and increase their chances of securing contracts.


2. Reduces Financial Risk for the Project Owner

The guarantee protects the project owner from financial losses if the winning bidder defaults on the project or withdraws after being awarded the contract. If this occurs, the project owner can claim compensation up to the guarantee amount, covering re-tendering costs or potential delays.


3. Supports Fair Competition

Tender guarantees promote fair competition by ensuring that only financially stable and serious bidders participate in the tender process. This helps prevent frivolous bids and enables project owners to make informed decisions based on genuine bids.


4. Ensures Commitment to Contractual Obligations

Since the guarantee is forfeited if the bidder does not proceed with the contract, it incentivizes bidders to honor their commitments. This ensures that bidders are genuinely interested in and capable of completing the project if selected.


5. Enhances Trust in Cross-Border and Large-Scale Projects

In international tenders or large-scale projects, tender guarantees help build trust between parties from different regions or industries. Project owners are reassured that bidders have met certain financial and legal requirements vetted by a bank, facilitating smoother and more secure contract negotiations.


Overall, a tender guarantee benefits both the project owner and the bidder by increasing trust, ensuring commitment, and reducing financial risk, which ultimately fosters more stable and secure contractual relationships in competitive project environments.