Caution Money on GeM
This caution money provision is being introduced for bringing discipline among sellers. All Sellers on GeM would be required to deposit a fixed amount with GeM as Caution Money deposit.
Who will pay caution money?
All the registered sellers except the followings need to pay the caution money to GeM.
Sellers like SHG, Artisans, Weavers, MSE Women and MSE (SC/ST) will be exempted from depositing Caution Money.
How much caution money is to pay?
The caution money is calculated on the basis of seller turnover as follows:
| S. No | Turnover | Caution Money |
|---|---|---|
| 1 | Less than 1 Crore | Rs 5,000 |
| 2 | Greater than 1 Crore but less than 10 Crore | Rs 10,000 |
| 3 | Greater than 10 Crore | Rs 25,000 |
For all cases where there is no turnover, the seller will deposit the lowest slab as caution money.
Forfeit Circumstances
The caution money shall remain at the disposal of GeM . This can be forfeited in part or in full in the following circumstances:
- Seller rejects or does not accept any Direct Purchase / L-1 Purchase order within defined timelines leading to order auto cancellation
- Failure of the seller in executing any GeM contract or if the Seller fails or neglects to observe or perform any of his obligations under the contract (applicable only in respect of contracts that did not have provision of Performance Security / PBG)
- Withdraws any bid submitted on GeM within the period of validity of the bid
- Fails to furnish requisite performance security / PBG as per GeM e-bid / RA conditions
How to pay caution money?
You have to login to your GeM Seller Profile. Under the Dashboard section, click on Manage Caution Money link.
You need to create a virtual bank account (Only can only use it for caution money purpose) for your seller account.
Select a suitable bank, click on SUBMIT button. The Sellers do not need to do any KYC to Open the Account for caution Money.
The Account would be opened by Bank Instantly without asking for any documentation/KYC from Seller. The Account being opened is a Sub account of the GeM escrow account with the sole purpose of collecting the Caution Money on behalf of the Seller. The account cannot be used for any other purpose by the seller.
- The Seller can view the Transaction summary/Statement of the account on GeM portal. The required Provision is made available on GeM portal in Seller's Caution Money Dashboard
- The Amount, once Deposited by the seller, cannot be withdrawn back
- An account Once Created with a Bank cannot be closed. Each seller can open only one account
A new virtual account will be opened for your GeM account. Now you can pay the applicable caution money amount through NEFT/RTGS to your virtually created account.
It will take 24-48 Hours to show your caution money account balance.