Bank Guarantee Replacement · Comparison Hub

How to Replace Every Bank Guarantee on Your Tender.

A typical Indian government tender locks up 20–30% of contract value in bank guarantees — bid, performance, mobilisation, retention, security deposit. Every one of those can now be replaced with an insurance surety bond. No FD lien, no bank credit limit used, no collateral. Same legal effect for the obligee.

Get a quote BG vs surety — full comparison
— Section 01 — The Six BGs

Six BGs in a govt tender. One surety panel.

Every Indian govt tender — NHAI, CPWD, MoRTH, Railways, NTPC, GAIL — uses some combination of these five bank guarantees, sometimes all of them. Each has an insurance surety equivalent. Click any one to see how it replaces.

— Stage 01 / Bidding
Bid Bond · EMD replacement
1–2% of tender value

Earnest money deposit / bid security. Held by the obligee through bid validity (~90+30 days). Returned on rejection; invoked if you refuse to sign.

See bid bond →
— Stage 02 / Award
Performance Bond · PBG replacement
5–10% of contract value

Performance security. Issued at contract signing, held through completion + defect liability period. Typical tenor 36–60 months. Largest single BG you'll issue.

See performance bond →
— Stage 03 / Mobilisation
Advance Payment Bond · APB replacement
100% of advance drawn

Mobilisation advance bond. Face value = the advance you draw. NHAI Circular 3.1.41/2025 explicitly accepts surety. Step-down as advance is recovered.

See advance payment bond →
— Stage 04 / Running
Retention Money Bond · In place of withheld cash
5–10% of running bills

Some obligees withhold retention from each bill; some accept a bond instead and release the cash. Mid-contract liquidity unlock.

Coming soon →
— Stage 05 / Award
Security Deposit Bond · SD replacement
5–10% of contract value

Where the contract demands a security deposit instead of (or alongside) PBG. Surety equivalent has identical legal effect.

Coming soon →
— Bonus / Customs & Court
Customs & Judicial Bonds
Per CBIC / court order

Outside tender flows — duty deferral, EPCG, advance authorisation (customs); appeals, attachments, injunctions (court). Same surety mechanism.

Talk to the desk →
— Section 02 — Replacement matrix

BG type → Surety equivalent.

Direct mapping. Every column has a working insurance surety equivalent already accepted by major obligees.

Tender stage
Bank guarantee
Surety bond replacement
Bidding
Bid security BG / cash EMD
Bid Bond — 0.5–1.2% p.a.
Award
Performance Bank Guarantee
Performance Bond — 0.8–2.0% p.a.
Mobilisation
Advance Payment BG
Advance Payment Bond — 0.8–1.5% p.a.
Running bills
Retention BG (or withheld cash)
Retention Money Bond — 0.7–1.5% p.a.
Award (alt to PBG)
Security Deposit BG
Security Deposit Bond — 0.8–1.8% p.a.
— Section 03 — Total cost over a typical tender

Cost on a ₹250 cr NHAI EPC contract.

Combined cost across all five BGs over a 5-year contract. Includes premium + bank commission + opportunity cost of FD lien. Surety route saves ~₹3.2 cr in working capital cost over the contract.

Bond
If BG route
If surety route
Bid bond (4 months)
₹90,000 (BG comm + FD opp cost)
₹37,500 (0.6% × ₹25 L)
Performance bond (60 months)
₹2.5 cr (3% × ₹12.5 cr × 5 + FD opp)
₹93 L (1.5% × ₹12.5 cr × 5 yrs)
Advance payment bond (24 months)
₹1.6 cr (2% × ₹25 cr × 2 + FD opp)
₹37 L (avg step-down × 0.9%)
Retention bond (24 months)
₹70 L
₹35 L
Total over contract
~₹4.95 cr
~₹1.66 cr
— Section 04 — Acceptance

Obligees that accept surety instead of BG.

Non-exhaustive list. We confirm acceptance per contract before binding so there's no ambiguity at issuance.

Central: NHAI, MoRTH, CPWD, Railways (RVNL, IRCON, RITES), Indian Air Force, NTPC, GAIL, PGCIL, NPCIL, ISRO, BSNL, MTNL, Major Ports (JNPT, Mumbai, Chennai), AAI.

State PWDs: Maharashtra, UP, Karnataka, Tamil Nadu, Gujarat, Rajasthan, MP, Telangana, AP, Kerala, Punjab.

PSUs / sectoral: SECI (solar), DMRC + 5 state metros, Major Refineries (IOCL, BPCL, HPCL), Major Port Trusts, Smart City SPVs, AMRUT 2.0 implementing agencies.

— Section 05 — Replacement process

5 steps to replace a BG.

Works for new tenders (issue surety from day 1) or existing contracts (swap mid-contract, release the FD lien).

01

Identify the BG and obligee

Which BG are you replacing — bid, performance, advance, retention, SD? Which obligee — NHAI, CPWD, Railways, state PWD? Send the tender document and the existing BG copy (if mid-contract).

02

Get obligee confirmation in writing

Most large obligees have published acceptance, but it's still wise to get a per-contract written confirmation from the project director or contract manager. Rakshati handles this — it's a one-page letter.

03

Underwriting file

Two years audited financials, net worth, bank statements, board resolution. For repeat contractors, just refresh — file already on record.

04

Quote, bind, issue

Indicative quote in 4 hours. Binder in 24–48 hours. Bond issued in obligee's preferred format — physical, digital with QR, or e-stamped. For BG swap: surrender the BG to the bank, release the FD lien.

05

Annual renewal

Premium pre-paid annually on the outstanding face value. Step-down bonds (advance, retention) reduce premium as the underlying amount amortises. Auto-renewed unless you cancel.

— Section 06 — FAQs

Frequently asked.

WhatsApp +91 91007 54343 or email info@rakshati.in.

Can I replace any bank guarantee with a surety bond in India?
Yes. The 2022 Surety Insurance Contracts Guidelines and the Ministry of Finance's 2023 GFR notification together permit insurance surety bonds in lieu of bank guarantees across all five BG types — bid (EMD), performance (PBG), mobilisation advance (APB), retention money, and security deposit. Acceptance is per-obligee and per-contract — we confirm in writing before binding.
Is replacing my BG with a surety bond cheaper?
Yes — typically 50–70% cheaper over a multi-year contract once you include opportunity cost of the FD lien banks hold against your BGs. Direct premium savings are smaller; the bulk comes from freeing the locked working capital.
Does the obligee have to approve a surety bond?
Yes — but most large govt obligees (NHAI, CPWD, MoRTH, Railways, GeM, NTPC) have publicly notified acceptance. Rakshati confirms in writing with the obligee before binding so there is no surprise at issuance.
What happens to my existing BGs if I switch to surety mid-contract?
Existing BGs can be cancelled and replaced with surety bonds mid-contract, subject to obligee consent (almost always granted). The FD margin held by the bank is released back to you within 7–15 working days. This is the easiest source of mid-contract working capital release — most contractors recover ₹1–10 cr of locked FDs this way.
What if the obligee invokes the bond?
For an unconditional bond, the insurer pays the obligee on first written demand — same as a BG invocation — and recovers from you under the indemnity. For a conditional bond, the insurer pays only after proven default. Rakshati runs the claims defence and obligee negotiation on your behalf.
Can I use surety for non-tender BGs (customs, court)?
Yes. Customs duty deferral bonds, EPCG bonds, advance authorisation bonds, and court appeal / attachment / probate bonds are all available through the same insurance surety mechanism. Each has its own form and pricing — talk to the Rakshati desk for these.

Got a BG to swap? Or a tender requiring one?

Forward the tender doc + existing BGs (if mid-contract) + financials. We come back in 4 hours with a quote per BG and a switch plan if any.

Start the BG swap WhatsApp the desk