Government e-Marketplace (GeM) sellers frequently encounter the term ePBG after winning a Government tender.

ePBG is associated with Performance Security.

While EMD primarily protects the buyer during the bidding stage, Performance Security protects the buyer during execution of the awarded contract.

Depending on the tender, the successful seller may be required to furnish Performance Security for a specified percentage and validity period.

Before accepting or executing a GeM contract, the seller should check:

• Whether ePBG / Performance Security is required
• Required percentage
• Performance Security amount
• Accepted security form
• Beneficiary
• Required validity
• Submission deadline
• Warranty or contract obligations
• Conditions for invocation
• Conditions for release

This guide explains ePBG from the perspective of a GeM seller and Government contractor.

ePBG generally refers to Electronic Performance Bank Guarantee.

In GeM procurement, it is associated with Performance Security furnished by the successful seller to secure proper performance of the awarded contract.

The purpose is to provide financial assurance to the buyer that the seller will perform its contractual obligations according to the agreed terms.

Performance Security should not be confused with EMD.

EMD relates primarily to bid participation, while Performance Security relates primarily to contract execution after award.

Performance Security is a financial security that may be required from the successful seller after award of a GeM contract.

It protects the buyer against certain failures by the seller to perform the contract according to its terms.

Depending on the tender and applicable conditions, Performance Security may cover obligations relating to:

• Supply
• Installation
• Service delivery
• Contract performance
• Warranty
• SLA compliance
• Completion of contractual responsibilities

The seller should use the exact requirement stated in the bid and resulting contract rather than applying a generic percentage or validity.

No.

ePBG / Performance Security is not necessarily required in every GeM procurement.

The seller should check the individual bid document.

Look for the section:

ePBG Detail

The bid may state:

• Required: Yes

or

• Required: No

If ePBG is required, the bid will generally specify the applicable percentage and duration.

Never assume that every GeM contract requires the same Performance Security.

Open the complete GeM bid document and locate the ePBG Detail section.

Check:

1. Is ePBG required?
2. What percentage is specified?
3. What is the required duration?
4. Who is the beneficiary?
5. What forms of Performance Security are accepted?
6. Is a Bank Guarantee required?
7. Is FDR permitted?
8. Is an Insurance Surety Bond permitted?
9. Is any physical submission required?
10. Are there additional conditions in the Buyer ATC?

Also read the GTC, STC and Buyer Added Terms before arranging the security.

There is no single percentage that should be assumed for every GeM tender.

The required percentage must be checked in the specific bid document.

For example, current GeM tenders may show percentages such as 3% or 5%, while special Buyer Added Terms may prescribe a different requirement where legally permissible.

Therefore, always use:

Contract / Order Value × ePBG Percentage Specified in the Bid

Required Performance Security

Do not prepare a Performance Bank Guarantee merely by using the percentage from another tender.

Suppose:

Contract Value = ₹50,00,000

ePBG Requirement = 5%

Performance Security:

₹50,00,000 × 5% = ₹2,50,000

Therefore, the successful seller would need to arrange Performance Security of ₹2,50,000, subject to the exact tender and contract conditions.

GeM tenders can specify different Performance Security requirements.

Therefore, avoid statements such as:

“GeM ePBG is always 3%”

or

“GeM ePBG is always 5%”

Instead, verify:

• ePBG percentage
• Contract value on which it is calculated
• Duration
• Applicable ATC
• Performance Security format

directly from the current tender and contract.

Performance Security is generally relevant after the seller becomes successful and the contract is awarded.

The exact submission timeline should be checked in:

• Bid document
• GeM contract
• Purchase order
• Applicable GTC
• Buyer Added Terms

The successful seller should begin arranging the security immediately after award rather than waiting until the final day.

Bank Guarantees and other instruments may require internal bank approval, margin, documentation and processing time.

The accepted form of Performance Security depends on the tender.

Possible forms may include, where permitted:

• Bank Guarantee
• e-Bank Guarantee
• Fixed Deposit Receipt
• Demand Draft
• Insurance Surety Bond
• Other security forms specifically allowed by the procurement conditions

The seller must use only the form accepted in the relevant bid or contract.

Never assume that an FDR or Demand Draft will be accepted simply because it was accepted by another department.

Yes, where the tender permits a Bank Guarantee or e-Bank Guarantee as Performance Security.

Before requesting the bank to issue the guarantee, verify:

• Beneficiary name
• Performance Security amount
• Bid / contract number
• Required validity
• Claim period, if applicable
• Prescribed format
• Issuing bank requirements
• Stamp requirement
• SFMS / electronic verification requirement, where applicable
• Physical submission requirement

The Bank Guarantee wording should follow the required format exactly.

An FDR may be accepted where the relevant GeM tender or Buyer Added Terms permit it.

Before preparing an FDR, verify:

• Beneficiary
• Amount
• Validity
• Bank
• Lien / pledge requirement
• Original-document submission requirement
• Upload requirement
• Dispatch address
• Acknowledgement process

Do not prepare an FDR until you confirm that it is an accepted security form for that particular contract.

ePBG validity is the period for which the Performance Security must remain valid and enforceable.

It is generally connected to the duration of the seller's contractual obligations.

Depending on the procurement, this can include:

• Contract period
• Delivery period
• Installation
• Commissioning
• Warranty
• Maintenance obligations
• Other post-delivery responsibilities

The exact validity should be taken from the bid and contract.

Performance Security may need to remain valid beyond the basic contract or supply period because some contractual obligations continue afterward.

Examples include:

• Warranty
• Defect liability
• Maintenance
• Replacement obligations
• Final acceptance
• Other post-completion responsibilities

Therefore:

Contract Duration

and

ePBG Duration

may not always be identical.

Always check the exact duration mentioned in the GeM bid.

EMD and ePBG serve different purposes.

A seller may encounter both EMD and ePBG in the same tender.

Do not assume that EMD automatically converts into Performance Security.

EMD and Performance Security are separate procurement requirements.

The successful seller should check the contract to determine:

• Whether a fresh Performance Security is required
• Whether adjustment of any existing security is permitted
• What amount is required
• What security format is accepted

Always follow the specific award and contract instructions.

The Performance Security should be issued in favour of the beneficiary identified in the tender or contract.

The beneficiary may be:

• Buyer organisation
• Paying authority
• Designated Government officer
• Department
• Other authority specifically named in the bid

Before issuing the Bank Guarantee or FDR, verify the beneficiary name exactly.

Even a minor mismatch can delay acceptance or verification.

A practical workflow is:

Step 1: Open the awarded GeM contract

Review the Performance Security requirement.

Step 2: Confirm the amount

Calculate the security using the percentage stated in the contract.

Step 3: Confirm validity

Check the required duration carefully.

Step 4: Check the accepted instrument

Confirm whether BG, e-BG, FDR, Insurance Surety Bond or another form is permitted.

Step 5: Prepare the security

Provide the exact contract information to the bank or issuing institution.

Step 6: Check beneficiary details

Match the beneficiary exactly with the contract.

Step 7: Verify instrument details

Check:

• Amount
• Contract number
• Date
• Validity
• Beneficiary
• Guarantee number

Step 8: Upload or submit as required

Follow the GeM and buyer instructions.

Step 9: Retain proof

Keep:

• Copy of Performance Security
• Bank acknowledgement
• Upload proof
• Dispatch proof
• Buyer acknowledgement
• Verification communication

Failure to furnish required Performance Security can create serious contractual consequences.

Depending on the tender and contract conditions, consequences may include:

• Delay in contract processing
• Withholding of payment
• Contractual action
• Cancellation
• Recovery
• Other remedies available to the buyer

Therefore, the Performance Security requirement should be reviewed before bidding, not only after contract award.

Yes.

Performance Security exists to protect the buyer if the seller fails to perform certain contractual obligations.

Depending on the contract, invocation may arise from matters such as:

• Failure to perform
• Contract default
• Non-supply
• Failure to meet contractual obligations
• Warranty failure
• Termination attributable to seller default
• Other circumstances specified in the contract

The exact invocation conditions should always be read from the contract.

Do not rely on a generic list when evaluating the financial risk.

Performance Security is generally released after the seller completes the relevant contractual obligations and the conditions for release are satisfied.

The release may depend on completion of:

• Supply
• Service period
• Installation
• Warranty
• Maintenance
• Final acceptance
• Other obligations specified in the contract

The seller should not assume that ePBG will automatically expire or be released without action.

Track the security and follow up with the buyer when contractual obligations are complete.

If all contractual obligations have been completed but Performance Security has not been released, verify:

1. Contract completion date
2. Warranty completion date
3. Performance Security validity
4. Outstanding obligations
5. Pending payment or dispute
6. Completion certificate
7. Buyer acceptance
8. Security instrument number
9. Original submission acknowledgement

Then send a written request to the buyer mentioning:

• GeM Contract Number
• Seller name
• Performance Security amount
• Bank Guarantee / FDR number
• Issue date
• Expiry date
• Contract completion details
• Warranty completion details
• Request for release / discharge

Keep written proof of all follow-up.

Performance Security can have a significant impact on working capital.

For manpower outsourcing, security, housekeeping, facility management and vehicle-hiring contracts, contractors may already be financing:

• Monthly wages
• EPF
• ESIC
• Bonus
• Gratuity provisions
• Uniforms
• Reliever manpower
• Fuel
• Vehicle cost
• Employee mobilisation
• GST
• Delayed receivables

Adding ePBG can further block:

• Bank limits
• Cash margin
• FDR funds
• Guarantee limits

Therefore, Performance Security should be included in the financial evaluation of a tender before the bid is submitted.

Before bidding, consider:

Performance Security Amount

• Bank Guarantee Charges
• Cash Margin / FDR Requirement
• EMD Already Blocked
• Mobilisation Cost
• Salary Working Capital
• Statutory Payments
• Payment Delay Risk = Actual Contract Funding Requirement

A profitable tender on paper may still create severe cash-flow pressure if Performance Security and working-capital requirements are ignored.

Example: Manpower Contract

Suppose:

Annual Contract Value = ₹1,20,00,000

ePBG = 5%

Required Performance Security:

₹1,20,00,000 × 5% = ₹6,00,000

The contractor may also need enough working capital to pay wages, EPF, ESIC and other statutory dues before receiving payment from the Government buyer.

Therefore, the actual funding requirement may be substantially higher than the ₹6,00,000 Performance Security alone.

Common Performance Security mistakes include:

1. Assuming a standard percentage without checking the bid
2. Calculating ePBG on the wrong contract value
3. Wrong beneficiary name
4. Insufficient validity
5. Wrong Bank Guarantee format
6. Missing claim-period requirement
7. Using a security form not accepted by the tender
8. Missing submission deadline
9. Not completing required electronic / bank verification
10. Incorrect contract number
11. Not retaining acknowledgement
12. Confusing EMD with Performance Security
13. Forgetting to track the expiry date
14. Allowing the BG to expire before contractual obligations are completed
15. Failing to request release after successful completion

Before submitting Performance Security, verify:

✅ ePBG required / not required
✅ Percentage checked
✅ Amount calculated correctly
✅ Contract value verified
✅ Beneficiary verified
✅ Accepted security form checked
✅ BG / FDR format checked
✅ Contract number correct
✅ Required validity checked
✅ Claim period checked, where applicable
✅ Issuing bank details correct
✅ SFMS / electronic verification checked
✅ Upload completed
✅ Original submission requirement checked
✅ Buyer acknowledgement retained
✅ Expiry date recorded
✅ Release date tracked

Winning the tender is only the beginning.

Government contractors may need to manage:

Tender → EMD → Bid Submission → Award → ePBG / Performance Security → Contract → Site → Employee Deployment → Attendance → Payroll → Minimum Wages → EPF & ESIC → Compliance → Billing → Receivables → Contract Profitability

DhirekOne is designed to connect these contractor operations in one platform.

For manpower outsourcing, security services, housekeeping, facility management, transport and other service contracts, this helps contractors maintain contract-wise operational and financial visibility from award through completion.

Q1. What is the full form of ePBG? ePBG generally refers to Electronic Performance Bank Guarantee and is associated with Performance Security under GeM contracts.

Q2. What is ePBG in GeM? ePBG is Performance Security that may be required from a successful GeM seller to secure proper performance of the awarded contract.

Q3. Is ePBG mandatory in every GeM tender? No. The specific bid should be checked to determine whether Performance Security is required.

Q4. What percentage is ePBG in GeM? There is no single percentage that should be assumed for every tender. The seller should use the exact ePBG percentage stated in the specific GeM bid or contract.

Q5. Is ePBG always 5%? No. Sellers should not assume a fixed percentage. Always check the ePBG Detail section of the bid.

Q6. Is ePBG the same as EMD? No. EMD is Bid Security associated mainly with the bidding stage, while ePBG is Performance Security associated mainly with execution of the awarded contract.

Q7. Can Performance Security be submitted through FDR? Yes, where the relevant tender expressly permits FDR as an accepted form of Performance Security.

Q8. Can ePBG be submitted through Bank Guarantee? Yes, where the tender permits a Bank Guarantee or e-Bank Guarantee.

Q9. How is ePBG amount calculated? The Performance Security amount is generally calculated by applying the percentage stated in the bid or contract to the applicable contract value.

Q10. How long should ePBG remain valid? The required validity is specified in the individual tender or contract and may extend beyond the basic contract period to cover warranty or other post-completion obligations.

Q11. Can ePBG be invoked? Yes. Performance Security may be invoked where circumstances specified in the contract occur, including certain seller defaults or failure to perform contractual obligations.

Q12. When is ePBG released? Performance Security is generally released after completion of the applicable contractual, warranty and other obligations, subject to the conditions of the contract.

Q13. Where do I check ePBG in a GeM tender? Check the ePBG Detail section of the GeM bid document and also review the GTC, STC, Buyer Added Terms and resulting contract.

Conclusion

ePBG is an important Performance Security requirement that may apply after a seller wins a GeM contract.

Before bidding, sellers should check whether ePBG is required, its percentage, amount, accepted security form, beneficiary and required validity.

Do not assume that Performance Security is always 3% or 5%, or that every GeM tender has the same validity period.

The individual bid and resulting contract should always be treated as the primary source for the applicable requirement.

For Government contractors, Performance Security also has a direct impact on working capital because bank limits, FDR margins and cash may remain blocked while wages, statutory contributions and other contract expenses continue.

DhirekOne helps contractors manage the wider tender-to-contract lifecycle, including tender tracking, EMD, contracts, employees, attendance, payroll, statutory compliance, billing and receivables.What is EMD in a GeM tender?What is EMD in a GeM tender?