Performance security after you win
ePBG is a performance security the winning seller submits after the contract is awarded, usually a percentage of the contract value stated in the bid (often 2–10%). It is returned after the contract is completed satisfactorily.
What to check in the bid
- ✓Whether ePBG is required at all
- ✓The percentage
- ✓How many months it must stay valid
- ✓The bank/format accepted
Plan your cash flow
A bank guarantee blocks part of your credit limit. Factor it into your price, especially on large orders.
When ePBG has to be submitted
After the contract is placed, the bid or contract states the number of days within which the seller must submit the ePBG. The guarantee is issued by the seller's bank in favour of the buyer, in the format GeM or the bid prescribes, and its details are then submitted on GeM against the contract. Start the process with your bank as soon as you know you are L1, because bank paperwork can take longer than expected.
How validity is worked out
ePBG validity normally has to cover the contract period, including any warranty period, plus the additional period the bid specifies. For example, if a contract includes supply followed by a warranty, the guarantee must stay valid until after the warranty obligations end, not just until delivery. If delivery is delayed or the contract is extended, the buyer can ask you to extend the guarantee, so keep its expiry date on your calendar.
Common ePBG mistakes
- ✓Ignoring the ePBG clause at bid stage and finding out the cost only after winning
- ✓Submitting a guarantee with a shorter validity than the bid requires
- ✓Wrong beneficiary details, contract number or amount on the guarantee
- ✓Missing the submission deadline, which can lead to contract cancellation and other action under GeM terms
- ✓Not asking for a release after completion, so the bank keeps the limit blocked and may keep charging for the guarantee
How ePBG fits with EMD, RA and MSE status
EMD protects the buyer while the bid is running; ePBG protects the buyer while the contract is running. An EMD exemption as an MSE or startup does not by itself remove the ePBG requirement, so read both clauses separately. In a reverse auction, the guarantee is worked out on the final contract value, so remember while bidding that the bank charges and the blocked limit come on top of whatever thin margin is left after the RA.
Planning with your bank
Talk to your bank before you start bidding seriously on GeM. Ask about the limit available for bank guarantees, the margin money or collateral they need, their charges, and how quickly they can issue a guarantee in the format GeM accepts. Knowing this in advance lets you decide which bids you can take on without stretching your working capital.
Frequently asked questions
Is ePBG the same as EMD?
No. EMD is a bid security given with the bid; ePBG is a performance security the winning seller gives after the contract is awarded.
Is ePBG required in every GeM contract?
No. The bid states whether a performance security is required, its percentage and its validity.
When is ePBG returned?
After the contract and warranty obligations are completed and the validity period required by the bid has run. Ask the buyer for a written release so your bank can cancel it.
Can an MSE be exempted from ePBG?
Only if the bid says so. MSE status mainly affects EMD and, where the bid allows, turnover and experience criteria; the performance security clause has to be read on its own.
What happens to the ePBG if I fail to perform?
The buyer can invoke the guarantee as the contract terms allow, and the bank then pays the guaranteed amount to the buyer. Avoid this by delivering as the contract requires and raising any problem with the buyer in writing early.
Related guides
Rules change. Always confirm the details in the bid document and on gem.gov.in before you bid. · Updated 2026-11-02
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