Use an Insurance Surety Bond as your EMD on GeM

GeM now allows sellers to submit an Insurance Surety Bond as EMD for selected tenders. When you click 'Apply for Bond', you are routed to a web page hosted by axiTrust, GeM's technology partner. There you can learn more about the Insurance Surety Bond and check your eligibility and how to apply.

An Insurance Surety Bond is issued by an IRDAI-registered insurance company and can be submitted as the Earnest Money Deposit (EMD) on a tender. It is a collateral-free alternative to a bank guarantee. It assures the buyer (beneficiary) that you, the seller, will fulfil your bid obligations, and it does not require you to pledge collateral, lock up cash or use your bank fund limits.

Some tenders on GeM require the seller to provide an Earnest Money Deposit (EMD) as bid or performance security, for which sellers usually procure a bank guarantee from their bank. Instead of blocking cash with a bank to get a bank guarantee, the seller can opt for an Insurance Surety Bond.

Yes. Insurance Surety Bonds are government approved and IRDAI authorised as a valid EMD for applying to tenders on GeM, subject to tender conditions. You may refer to GeM's General Terms and Conditions, which permit the use of an Insurance Surety Bond for EMD. Acceptance against a specific tender is stated in the tender document, so always review the specific bid requirements.

A bank guarantee is a promise to the buyer from the bank, backed by the seller's capital. An Insurance Surety Bond is a guarantee issued to the buyer by an insurance company without blocking your cash or bank limits, backed by their assessment of your business performance and financials.

Banks charge a commission to issue a bank guarantee. Insurance companies charge an insurance premium to issue an Insurance Surety Bond.

If the tender accepts an Insurance Surety Bond as EMD, it is specified in the EMD section of the tender document.

Subject to the insurer's terms and conditions, any business with at least 3 years of operational track record, financial stability and relevant project experience may be eligible. All kinds of businesses can apply: public limited, private limited, partnership firms, LLPs and proprietorships.

When you reach the EMD or ePBG section in the bid participation journey, you will see two options for submitting EMD: 'In Form of Surety Bond' and 'In Form of Bank Guarantee'. Choose 'In Form of Surety Bond', then select 'Online' as the mode. You can then learn more, or click 'Apply for Bond' to begin.

GeM first takes your consent to share your details with its technology partner axiTrust. Tick the consent and click 'Proceed', then consent to being redirected to the partner page. On the axiTrust page, your KYC and bid information is pre-filled. Validate it and confirm through an OTP. The axiTrust team then guides you on the next steps. Once the bond is uploaded on GeM, you can complete the rest of the tender process and track status updates on GeM.

In most cases the insurer asks for:

• Company and director, proprietor or partner details
• Audited financials for the previous 3 financial years
• Certified financials for the current financial year
• A credit rating report from a certified external agency, if available
• A credit bureau report (CIBIL, CRIF, Experian, Equifax) for the company, proprietor or partner
• Business GST filing details (optional)

This list is indicative. Insurers may ask for more depending on the applicant.

You do not need collateral for an Insurance Surety Bond. Depending on the insurer's risk assessment of your business, the insurer may ask you to create a lien FD or deposit margin money, which would be a percentage of the EMD value.

You can check your eligibility within 24 hours by clicking 'Apply for Bond' and submitting your details on the landing page. Once your details and consent are in, an IRDAI-licensed insurer can issue the bond in under 48 hours in most cases. Larger bond values may take a little longer, as the insurer completes its risk assessment.

Like a bank guarantee, the Insurance Surety Bond is issued by the insurance company and shared with you by email. If you avail it through the 'Apply for Bond' button, the bond document is uploaded directly to your tender bid on GeM.

The premium varies case to case. Depending on the insurer's risk assessment, it may fall in a broad range of about 0.5% to 5% per year of the bond value. Some insurers have a minimum premium clause regardless of the risk percentage. Over and above the premium, the seller bears the stamp duty and nominal processing fees for the indemnity agreement and bond issuance.

A bond, once issued, can be cancelled only if the tender is cancelled by the beneficiary, who must issue a letter citing the reasons. Stamp duty once paid is not refunded. The premium is refunded subject to each insurer's cancellation and refund guidelines.

If you withdraw from the bid, the bond becomes void and the premium is not refunded.

For a Bid Bond, if it must be amended before the bid closure date, the beneficiary issues a corrigendum, which the seller submits to the insurer. In all other cases, an amendment can be applied for only with a valid notification from the beneficiary that validates the purpose.

The beneficiary can claim against the bond by contacting the insurance company. The details and process to invoke the bond are mentioned on the document issued by the insurer.

For any further queries on the Insurance Surety Bond, use the Contact us form and our team will get back to you. You can also track application status on the EMD tab on the tender page.

Yes. Your information is used only to give you relevant information and assess your eligibility. Data is transferred via secure, encrypted APIs, the same standard used by banking and financial platforms. axiTrust maintains ISO 27001 aligned information security practices. All data is stored on India-resident infrastructure with AES-256 encryption at rest and TLS encryption in transit. axiTrust follows industry best practices including role-based access controls, periodic vulnerability assessments and audit logging.