While submitting a tender, contractor is required to deposit some amount with department as a guarantee of tender known as______.

Explanation:

Earnest money deposit:

• It is a small refundable fee collected by the department from each bidder to ensure that a Bidder does not submit a Dummy Bid or back out at the time of tender opening.
• It is always in form of a Demand Draft & cheques or cash are strictly not allowed
• It is returned when all Bids are opened & tender is awarded to another firm.
• It is generally 2% of the Tender Value.
• After the Bid is opened, if a Bidder refuses to take the contract, then his EMD is forfeited.

Security deposit:

• It is the amount of money that has to deposited with the Buyer once the tender is awarded to a Bidder to ensure that if he does not complete the task as per the work order, the Buyer can recover the loss by forfeiting his Security Deposit.
• It can be in form of a Bank Guarantee, National savings certificates, Cash, etc.
• When the Winning Bidders make the Security Deposit, he gets his EMD Back.
• It is generally 10% of the Tender Value.

Caution money:

• It is the amount of money that someone has to pay when they rent property, use a service, etc. which will not be returned if they damage something or owe money at the end of their contract.

Bank guarantee:

• It is a written contract given by a bank on the behalf of a customer that undertakes to pay or discharge the liability of the debtor in case of any default.