The Ministry of Defence vide its notification dated 16th September 2021 has promulgated a Standard Operating Procedure (SOP) to facilitate clarity in procedure to be followed by the Buyer in respect of Bank Guarantees (BGs) submitted by the bidders from international banks. This will facilitate timely conclusion of contracts in procurement cases involving BGs from foreign banks.
The Defence Acquisition Procedure (DAP) 2020 provides the right to the buyer to seek confirmation of the foreign bank’s BG from an Indian bank, where required, at the bidder’s cost.
An SOP has been issued on the steps to be followed by the Buyer for seeking the advice of SBI, Parliament Street Branch, New Delhi with regard to the requirement of confirmation of such BGs. If required, the confirmation of foreign bank’s Bank Guarantees will be through a counter-guarantee by an Indian Public or Private Scheduled Commercial Bank at the bidder’s cost.
The DAP 2020 allows bidders to submit various types of BGs such as advance payment bank guarantee (APBG) and performance cum warranty bank guarantee (PWBG) for discharge of various contractual obligations.These BGs can be from any Indian public or private scheduled commercial bank (as notified by Reserve Bank of India) or first class banks of international repute.
