EMD stands for Earnest Money Deposit.

In the context of tendering and procurement

processes, EMD refers to a sum of money that bidders are required to submit as a
security deposit along with their bid to demonstrate their seriousness and
commitment to participating in the tender process. Here's how EMD typically works:

1. **Purpose**: The primary purpose of EMD is to deter frivolous or non-serious

bidders from participating in the tender process. By requiring bidders to submit a
financial commitment upfront, the procuring entity can ensure that only genuine and
financially capable bidders participate.

2. **Amount**: The amount of EMD is specified in the tender documents by the

procuring entity and is typically calculated as a percentage of the estimated contract
value. The exact percentage may vary depending on the nature and value of the
procurement.

3. **Submission**: Bidders are required to submit the EMD along with their bid
documents within the specified deadline. The EMD amount is usually submitted in
the form of a bank guarantee, demand draft, or fixed deposit receipt issued by a
recognized financial institution.

4. **Refund or Forfeiture**: After the bid opening and evaluation process is

completed, the EMD is either refunded to unsuccessful bidders or forfeited in favor
of the procuring entity. If the successful bidder fails to fulfill their obligations, such as
signing the contract or providing the required performance security, their EMD may
be forfeited.

5. **Validity Period**: The EMD is typically valid for a certain period specified in the
tender documents. If the procurement process extends beyond this validity period,
bidders may be required to renew or extend their EMD to remain eligible.

6. **Security and Confidentiality**: The procuring entity is responsible for

safeguarding the EMD submitted by bidders and ensuring its proper accounting and
utilization. EMD details are usually kept confidential to prevent any bias or unfair
advantage during the tender evaluation process.
Overall, EMD serves as a mechanism to ensure the integrity and seriousness of the
tendering process while providing financial security to the procuring entity. It helps
mitigate risks associated with non-performance or default by bidders and promotes
transparency and fairness in public procurement.