Indian Overseas Bank launches electronic bank guarantee scheme

Current context: The Indian Overseas Bank has collaborated with the National E-Governance Services Limited (NeSL) to launch the e-BG (Electronic Bank Guarantee) scheme.

• The e-BG is a digital instrument issued by the bank to ensure the fulfilment of a specific action/performance by the applicant, and to prevent the occurrence of fraud and manipulation.
• It is essentially a promise made by the bank to cover losses in the event of loan default by the borrower.
• Unlike the traditional paper-based bank guarantees that require physical stamping and wet signatures, the e-BG is issued instantly in a paperless mode with digital stamping and digital signature through NeSL’s Digital Document Execution (DDE) platform.
• This ensures real-time issuance of e-BG, which not only enhances transparency but also reduces the turnaround time from days to minutes.
• Prior to this launch, HDFC Bank and State Bank of India (SBI) also launched e-BG in association with NeSL.

National E-Governance Services Limited (NeSL):

• Headquarters – Mumbai, Maharashtra
• Managing Director & CEO – S. Ramann

Question:

Q.1 What is e-BG?
a. A type of bank account
b. A digital instrument issued by a bank as a guarantee
c. A government scheme for digital payments
d. A type of loan offered by banks