Electronic Bank Guarantees
Why in news?
The National e-Governance Division (NeGD) under the MeitY and National E-Governance Services Limited (NeSL) have signed a landmark MoU to integrate NeGD’s cloud-based Entity Locker platform with NeSL’s Digital Document Execution (DDE) system for e-BGs.
Key points about the e-BG system
- e-BGs are fully digital, legally valid, tamper-proof bank guarantees that eliminate physical documentation.
- The time for issuance, renewal, and invocation is drastically reduced from days to just minutes.
- Beneficiaries and applicants can securely access their digitally executed bank guarantees through their Entity Locker accounts.
- This paperless process benefits over 60 institutions including banks, NBFCs, capital market, and corporate entities.
- It promotes faster turnaround, increased transparency, eco-friendliness, and compliance with relevant regulations such as the Insolvency and Bankruptcy Code, 2016.
- The system is especially beneficial and accessible for MSMEs.
- The collaboration also envisages expansions like e-stamp paper procurement and real-time digital contract signing using e-signing facilities.
