From Days to Minutes: India Digitizes Bank Guarantees for Paperless Governance

byPaytm Editorial TeamLast Updated: October 9, 2025
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Key Takeaways:
  • India is moving to a fully digital, real-time e-Bank Guarantee system.
  • Processing time for bank guarantees will drop from days to just minutes.
  • NeGD's 'Entity Locker' and NeSL's platform are integrating for this service.
  • The new digital BGs are legally valid, tamper-proof, and entirely paperless.
  • This initiative significantly boosts the ease of doing business for over 60 institutions.

Source:  PIB

In a significant move to enhance digital governance and improve the ease of doing business, India is set to revolutionize the way bank guarantees are issued and managed.  A landmark Memorandum of Understanding (MoU) was signed between the National e-Governance Division (NeGD), under the Ministry of Electronics and Information Technology (MeitY), and National E-Governance Services Limited (NeSL) at the Global Fintech Fest 2025. This collaboration will see the integration of NeGD’s ‘Entity Locker’ with NeSL’s Digital Document Execution (DDE) platform, paving the way for a fully digital, real-time, and legally compliant system for electronic bank guarantees (e-BGs).

This initiative is poised to benefit over 60 institutions, including banks, NBFCs, and corporate entities, by drastically reducing the time it takes to process bank guarantees from days to mere minutes.

Here’s a breakdown of this pivotal development:

  • The Collaboration: The MoU brings together two key digital infrastructure entities.
    • NeGD: An arm of the Ministry of Electronics and Information Technology, NeGD is responsible for supporting e-governance initiatives across the country.
    • NeSL: Regulated by the Insolvency and Bankruptcy Board of India (IBBI), NeSL is an information utility that provides a platform for digital and paperless document execution.
  • The Technology Integration:
    • Entity Locker: This is a cloud-based document management platform from NeGD, an extension of the popular DigiLocker, designed for businesses and government entities to securely store, share, and verify documents.
    • Digital Document Execution (DDE) Platform: NeSL’s pioneering platform facilitates the secure and paperless execution of contracts, including the now legally enforceable electronic bank guarantees (e-BGs).
  • How it Works: The integration will allow beneficiaries and applicants of e-BGs to securely access their digitally executed bank guarantees from NeSL’s repository directly within their Entity Locker accounts. This creates a seamless and transparent digital workflow.

Key Advantages of the New System:

This move towards digital execution of bank guarantees offers a multitude of benefits:

  • Speed and Efficiency: The turnaround time for issuing, renewing, and invoking bank guarantees will be reduced from several days to just a few minutes.
  • Enhanced Security: The e-BGs will be fully secure and tamper-proof, eliminating the risks associated with physical documents.
  • Centralized Verification: All e-BGs will be easily verifiable through a central repository, adding a layer of trust and transparency.
  • Environmentally Friendly: The paperless process is a significant step towards sustainable and eco-friendly governance.
  • Legal Compliance: The digitally executed documents are legally valid and adhere to all necessary regulations, including the Insolvency and Bankruptcy Code, 2016.
  • Accessibility for MSMEs: The platform is designed to be easily accessible and affordable, which will particularly benefit Micro, Small, and Medium Enterprises (MSMEs) by providing them with a streamlined way to manage their financial documents.

What the Leaders are Saying:

Shri J.L. Gupta, Director of NeGD, expressed his optimism about the collaboration, stating, “We are expecting more such collaborations with NeSL in the future. With NESL’s e-stamp paper service, one can procure e-stamp paper and sign contracts in real time digitally using the e-signing facility; ensuring a seamless, paperless, and legally valid process.“

Shri Debajyoti Ray Chaudhuri, MD & CEO of NeSL, highlighted the transformative impact of this initiative, adding, “NeSL’s e-BG addresses all the challenges in the traditional physical BGs. It is also easily accessible and affordable. The MoU with MeitY is a significant milestone as it would help users of our eBGs like the MSMEs, who can now access an entire bouquet of services including access of their eBGs through Entity Locker.”

This strategic alliance marks a crucial step in India’s journey towards a fully digital and efficient governance model, promising to significantly enhance the ease of doing business for enterprises across the country.

Author

Paytm Editorial Team

The Paytm Editorial Team is a collaborative group of writers, editors, and industry experts. We're dedicated to bringing you the latest insights, news, and guides on digital payments, financial services, and the technology that's shaping India's economy. We offer easy-to-follow guides and insights to help you explore Paytm’s products, features, and services. Our goal is to provide clear, reliable, and helpful information to empower you on your financial journey.

FAQs

What is the major announcement regarding e-Bank Guarantees in India?

The National e-Governance Division (NeGD) and National E-Governance Services Limited (NeSL) have signed an MoU to integrate their digital platforms. This will allow for the real-time digital execution of electronic bank guarantees (e-BGs), making the process faster, more secure, and entirely paperless.

How will this new system for e-BGs work?

NeGD's 'Entity Locker' will be integrated with NeSL's Digital Document Execution (DDE) platform. This will enable businesses and government entities to securely access and manage their digitally signed e-BGs from a central repository directly through their Entity Locker accounts.

What are the main benefits of moving to digital e-Bank Guarantees?

The key benefits include a massive reduction in processing time from days to minutes, enhanced security with tamper-proof documents, easy verification through a central system, and a completely paperless and eco-friendly process. It also aims to be more accessible and affordable, especially for MSMEs.

Who will benefit from this new initiative?

Over 60 institutions, including banks, NBFCs, capital market entities, and various corporate entities, are expected to benefit from this streamlined and efficient process.

Are the digitally executed e-Bank Guarantees legally valid?

Yes, the e-BGs executed through NeSL's DDE platform are legally enforceable in their digital form and comply with all applicable laws, including the Insolvency and Bankruptcy Code, 2016.
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