What is an Earnest Money Deposit (EMD)?

The Earnest Money Deposit is a security amount which is required to be deposited by the bidders of a tender, so as to indicate a serious intent of participation in the tender process. This amount is refundable, unless the buyer finds the bidder to have violated the rules of the tender participation process.

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Generally the Earnest Money Deposit (EMD) Amount is about 3 to 5 % of the Tender Value. The EMD is required to be furnished by the bidders along with the tender bid documents. Tendering agencies would allow different forms of EMD, including Account Payee Demand Draft, Fixed Deposit Receipt, Banker's Cheque or Bank Guarantee from any of the public sector banks or a private sector bank authorized to conduct government business.

Generally an EMD is to remain valid for a period of forty-five days beyond the final bid validity period. EMD of the unsuccessful bidders are returned to them at the earliest after expiry of the final bid validity and latest on or before the 30th day after the award of the contract. The Bid Security of the successful bidder is returned, without any interest whatsoever, after the receipt of Performance Security from them as called for in the contract.

EMD is not required to be submitted by those Bidders who are registered with the Central Purchase Organization (e.g. DGS&D), National Small Industries Corporation (NSIC) or any Department of MoD or MoD itself.

The EMD will be forfeited if the bidder withdraws or amends, impairs or derogates from the tender in any respect within the validity period of their tender.