ePBG on GeM: amount, validity, how to submit and release
What ePBG is on GeM, how much the buyer can ask for, the 15-day deadline, how long it must stay valid, and when it's released or forfeited.
ePBG is the performance security you give a GeM buyer after you win. The buyer can ask for up to 5% of the contract value, you must submit it within 15 days of the award, and it has to stay valid until 2 months after your last obligation, warranty included. Your payments don’t start until the buyer has it and has verified it.
The EMD comes up on every bid, so most sellers know it well. The ePBG gets less attention, though it can be the bigger amount and it stays out much longer. GeM recommends an EMD of 1% of the estimated value, while the ePBG can go up to 5% of the contract value. On a goods order with a one-year warranty, it can sit with the buyer for well over a year.
If you need a refresher on how the two differ, my EMD, ePBG, MII and MSE explainer covers the basics. This post is the detailed version: the rules, the numbers and the timeline.
What is ePBG on GeM?
ePBG stands for electronic performance bank guarantee. It’s the security a buyer takes from the successful seller to make sure the contract is performed. On GeM, the General Terms and Conditions (GTC 4.0, version 1.29, dated 25 March 2026) cover it in clause 7.
What the GeM terms require
The GTC says that for contracts placed after e-bidding or a reverse auction, performance security will be obtained from the successful bidder. The buyer selects the percentage while finalising the bid and must show it, so you can see it before you quote.
There’s no performance security requirement for contracts placed by:
- Direct purchase or L-1 purchase under GFR Rule 149 (i) and (ii). Direct online purchase on GeM is allowed up to ₹50,000.
- Push button procurement
What counts as performance security
The GTC defines it broadly. It can be an Insurance Surety Bond, an account payee demand draft, a fixed deposit receipt from a commercial bank, a bank guarantee (including an e-bank guarantee) from a commercial bank, or online payment in a form the bid document accepts. The bid decides which of these you can use.
How much ePBG can a GeM buyer ask for?
On GeM, the buyer can choose a performance security of up to 5% of the contract value. The GTC adds that, as per the GFR, it should be between 3% and 5%.
What the GFR says now
GFR 2017 Rule 171(i) sets performance security at 3% to 5% of the contract value for procurement of goods, consultancy services and non-consultancy services. Works are different: performance security plus security deposit or retention money stays at 3% to 10%.
The Manual for Procurement of Goods, Second Edition 2024 repeats the 3% to 5% figure in para 6.1.2. It also lets a buyer set an upper ceiling on the amount and, for multi-year contracts such as rate contracts, consider reducing the security in line with the balance contract period.
The temporary 3% rule, and when it ended
You may still see 3% quoted as a flat rule. That came from a Department of Expenditure OM dated 12 November 2020 (F.9/4/2020-PPD). It cut performance security from 5% to 10% down to 3% for existing contracts and for tenders issued or concluded until 31 December 2021, as pandemic relief.
A later OM of 30 December 2021 extended the cut to 31 March 2023. Contracts signed at 3% stay at 3% for their whole duration. After that, Rule 171 was amended twice: to 3% to 10% in April 2023, then to 3% to 5% for goods and services by OM F.1/2/2023-PPD.
| Period | Performance security rule |
|---|---|
| GFR 2017 as issued | 5% to 10% of contract value |
| 12 Nov 2020 to 31 Mar 2023 | Reduced to 3% (DoE OMs of 12.11.2020 and 30.12.2021) |
| From April 2023 | 3% to 10% (OM 1/2/2023-PPD, 03.04.2023) |
| Current, goods and services | 3% to 5% (OM F.1/2/2023-PPD) |
| GeM bids | Buyer’s choice, up to 5%, shown in the bid |
A worked example on a ₹20 lakh order
Picture a supplier who wins a GeM bid for office furniture with a contract value of ₹20,00,000. Here’s what the ePBG looks like at different percentages the buyer might have set.
| Buyer’s ePBG % in the bid | ePBG amount |
|---|---|
| 3% | ₹60,000 |
| 4% | ₹80,000 |
| 5% (GeM maximum) | ₹1,00,000 |
At 5%, ₹1 lakh of guarantee has to be in place within 15 days of the award. It stays there through delivery, the whole warranty, and two months more. If you pay it as a demand draft or online transfer instead of a guarantee, the cash itself sits with the buyer for that period. No interest is payable on it.
The GTC uses “the value of contract” as the base, so check the contract value on your GeM order, not your quoted unit price.
On GeM, your payments don’t fall due until the buyer has received your performance security and verified it. A late ePBG means a late payment.
How long must the ePBG stay valid?
The GTC says the performance security must be valid for 2 months beyond the date of completion of all contractual obligations, including warranty obligations. GFR Rule 171(ii) says the same thing in days: sixty days beyond completion of all obligations, warranty included.
Why warranty decides the date
Under GTC clause 10, goods carry a standard one-year guarantee or warranty from final acceptance by the consignee, unless the category specification or bid sets a longer period. So for most goods orders, the validity date is roughly: delivery and acceptance, plus the warranty, plus two months.
If the contract obligation period is extended, the GTC makes you liable to extend the guarantee’s validity to match. Ask your bank for the amendment as soon as an extension is agreed.
The award-to-release timeline
Here’s the full timeline for the ₹20 lakh example. The delivery period below is illustrative, so use the one on your contract.
| Stage | When | Rule |
|---|---|---|
| Contract awarded on GeM | Day 0 | Clock starts |
| Submit ePBG to buyer | By day 15 | GTC clause 7 |
| EMD refunded | Within 15 days of the buyer receiving the ePBG | GTC clause 4(xiii) |
| Supply and final acceptance | Per the contract’s delivery period (say, day 45) | Contract |
| Warranty | 1 year from final acceptance, unless the bid says longer | GTC clause 10 |
| ePBG validity ends | 2 months after warranty and all obligations end | GTC clause 7, GFR 171(ii) |
| ePBG refunded | Within 30 days of completion of all obligations | GTC clause 7 |
How do you submit the ePBG on GeM?
The deadline is the hard part: 15 days from the award of the contract on GeM. Bank paperwork can easily take most of that.
Steps that work
- Read the bid’s ePBG details before you bid. Note the percentage and the duration, and check that your bank limits can carry it.
- On award, request the guarantee from your bank straight away. Give the exact amount, the buyer as beneficiary, the GeM contract number and a validity date that covers warranty plus two months.
- Ask for an e-BG if your bank issues them. The GTC includes an e-BG facility on GeM integrated through NeSL (National E-Governance Services Ltd).
- If the bid allows a demand draft, FDR or online transfer instead, follow the buyer’s instructions exactly. Some buyers’ terms ask you to upload a scan or payment proof in place of the PBG and deliver the original within the 15 days.
- Confirm with the buyer that it has been received and verified. Under the Goods Manual, the buyer records the performance security details on the GeM portal.
Why an e-BG is easier
The Goods Manual (para 6.1.4) describes an e-BG as a dematerialised bank guarantee on NeSL, an information utility registered with the Insolvency and Bankruptcy Board of India. NeSL handles issue, verification, amendment, invocation and release, and the facility runs 24/7.
For a buyer, verifying the e-BG on NeSL is enough, with no separate check with the issuing bank. A paper bank guarantee, by contrast, has to be confirmed in writing with the issuing branch before the buyer accepts it (para 6.1.6).
An option that spares your bank limit
An Insurance Surety Bond is accepted under both the GTC and GFR Rule 171. The Goods Manual (para 6.1.3) notes it’s a premium-based insurance product that doesn’t need collateral from you, unlike a bank guarantee. Check that the bid accepts it before you rely on it.
When can the buyer forfeit your ePBG?
The GTC says that if the seller fails or neglects to observe or perform any obligation under the contract, the buyer may lawfully forfeit the performance security in whole or in part. Know the specific grounds.
Grounds in the GeM terms
- Failing or neglecting any contract obligation (clause 7)
- Non-performance within the delivery period, leading to cancellation of the contract for default, along with possible rating downgrade or debarment (clause 19)
- Input tax credit denied to the buyer, or a tax demand recovered from the buyer, because of your GST non-compliance: the buyer may recover the amount from the performance security (clause 8)
- Penalties set in the buyer’s ATC. Some bids let the buyer recover delay or service penalties from the PBG, so read that clause.
The Goods Manual (para 9.7.1) adds that the buyer may deduct from the security for any loss or damage caused by your default, then ask you to top it back up to its original amount.
If you never submit it
There’s nothing to forfeit if you never submit the ePBG, but the cost lands elsewhere. Under GTC clause 4(xiii), failing to furnish the performance security within the stipulated time is a ground for forfeiting your EMD. Clause 21 lists it as a ground for administrative action such as suspension.
Getting your ePBG released, and what to do if it’s late
Under the GTC, if you perform and complete the contract in all respects, the buyer shall refund the performance security within 30 days of completion of all your contractual obligations. The Goods Manual (para 6.1.2) sets an outer limit of 60 days for central buyers and asks senior officers to monitor returns.
How the release actually happens
| Form you gave | How it comes back |
|---|---|
| e-BG on NeSL | The buyer releases it on the NeSL portal with a digitally signed request, without going to the bank |
| Paper bank guarantee | The buyer returns or discharges it, then your bank frees the limit |
| Demand draft, FDR or online payment | The buyer refunds or returns the instrument, without interest |
If the release is delayed
- Confirm all obligations are complete: delivery accepted, warranty period over, no open claims.
- Write to the buyer with the contract number, ePBG details, the completion date, and the GTC clause 7 refund term of 30 days.
- If nothing moves, follow the same written escalation I lay out in the EMD refund process, up to the buyer’s higher authority.
- On GeM, you can raise an incident against a buyer who isn’t following the terms. Read how GeM incident management works first, because it has its own timelines.
With a paper guarantee, keep an eye on its expiry date as well. Once the buyer confirms release, take that confirmation to your bank so the limit is actually freed.
The ePBG also holds up your first payment, so it pays to get the cash-flow side right from day one. My post on government payment timelines covers what happens once the invoice is in.
Frequently asked questions
What is ePBG on GeM?
ePBG is the electronic performance bank guarantee, the performance security a seller furnishes after winning a GeM bid or reverse auction. It protects the buyer if you don't perform the contract. The GeM terms also accept other forms, such as an insurance surety bond, demand draft, fixed deposit receipt or online payment, where the bid allows them.
How much ePBG is required on GeM?
Up to 5% of the contract value. The GeM General Terms and Conditions let the buyer choose the percentage and require it to be shown in the bid. Under GFR 2017 Rule 171, performance security for goods and services should be 3% to 5% of the contract value.
What is the validity period of ePBG on GeM?
It must remain valid for 2 months beyond the date of completion of all contractual obligations, including warranty obligations. Under the GeM terms, the default warranty is one year from final acceptance unless the bid says otherwise, so a goods contract's ePBG usually runs well over a year.
When is ePBG released on GeM?
Once you have duly performed and completed the contract in all respects. The GeM terms say the buyer shall refund the performance security within 30 days of completion of all contractual obligations by the seller. For an e-BG, the buyer can release it through the NeSL portal.
What happens if I don't submit the ePBG within 15 days?
Your payments stay on hold, because under the GeM terms they only fall due after the buyer receives and verifies the performance security. Failing to furnish it within the stipulated time is also a ground for forfeiting your EMD and for administrative action by GeM.
Do MSEs need to give ePBG on GeM?
Yes, unless the bid says otherwise. The MSE exemption in the GeM terms covers bid security, meaning EMD. Clause 7 on performance security has no matching MSE exemption, so plan for the ePBG even if you skipped the EMD.