- EMD is bid security — small, short, and refundable if you behave.
- PBG is performance security — larger, and held through the O&M period.
- LD is a penalty for late completion, deducted from payment or the PBG.
- A PBG is encashed on failure to deliver, poor work, or neglected O&M.
- Every percentage, cap and validity is RfS-specific — verify before you bid.
Before you cost a single panel, read the money-at-risk clauses. PM-KUSUM is a tender business, and three instruments decide how much of your cash is exposed: EMD, the PBG and LD penalties. Misread them and a thin-margin win turns into a loss. This guide explains PM-KUSUM PBG, EMD and LD penalties so you can price the risk before you bid.
EMD, PBG and LD in plain words
These three terms describe money the buyer can hold or take if you let them down. EMD is the deposit to enter the bid. The PBG is the bond that you will deliver and maintain. LD is the fine for being late. Each one is set by the request for selection (RfS) — the tender document — so the numbers below are typical patterns, not fixed rules.
Treat all the percentages, validity months and caps in this guide as estimates. They vary per RfS and have been amended by MNRE over time. Always verify the exact figures against the specific tender RfS and the latest MNRE bank-guarantee amendment at the time you bid.
EMD: the bid security
EMD, or earnest money deposit, is the security you submit with your bid to prove you are serious. It is usually a small share of the estimated order value, given as a bank guarantee or a deposit. If you do not win, you get it back. If you win, it is refunded after you furnish the PBG, or it is converted into the PBG.
When EMD is forfeited
EMD is forfeited if you withdraw your bid during its validity, or if you win and then refuse to sign the agreement or furnish the PBG. In other words, EMD punishes bidders who do not stand behind their own bid. It is the cheapest money at risk, but losing it also bars you from many future bids.
PBG: the performance security
The PBG, or performance bank guarantee, is the big one. It is a bank guarantee you furnish after award, sized as a percentage of the contract value, and the buyer can encash it if you fail to perform. Unlike EMD, the PBG stays live for a long time — often through the project and the mandatory O&M period.
Why the validity period matters
A PBG that runs for several years ties up real money at your bank for that whole time, usually as a fixed-deposit margin plus annual charges. If your tender carries a multi-year O&M obligation, the PBG often must stay valid across it. The exact PBG validity in months is set by each RfS and has been amended by MNRE, so confirm it against the specific tender before you fund it. See our EMD and PBG financials guide for how to fund both without choking your cash flow.
LD: the penalty for delay
LD, or liquidated damages, is the fine the tender charges when you finish late. It is usually a small percentage of the delayed order value per week or per period of delay, capped at a maximum total. Once the cap is hit, the buyer may treat the contract as defaulted and move to encash the PBG.
LD is a margin killer on thin bids
On a low-margin Component B or C win, even a few weeks of LD can wipe out your profit. Delay risk is rarely about your crew alone — it includes module supply, DCR sourcing, farmer readiness and site access. Build a realistic schedule into your bid economics and add a buffer for the things you do not control.
The money-at-risk matrix
Here is how the three instruments compare at a glance. Use it to frame your risk, then replace every figure with the exact terms from the live RfS.
Comparison is illustrative — EMD/PBG percentages, PBG validity months and LD rates/caps vary per RfS and were amended by MNRE. Verify against the specific tender RfS and the latest MNRE BG amendment.
When a guarantee is encashed
A PBG is encashed when the buyer decides you have not held up your end. The common triggers are failure to deliver on time past the LD cap, abandoning the work, supplying non-compliant equipment, or neglecting the O&M obligation. The buyer can also encash the PBG to recover LD it could not deduct from a payment.
Encashment is rarely sudden
Most encashment follows notices and a default declaration, not a surprise. That gives you a window to cure the problem. Keep a dated record of every notice and your response, because that paper trail is your defence if the dispute escalates. Encashment triggers vary by RfS, so confirm them against the specific tender at publish.
How to protect your money
You cannot remove the risk, but you can manage it. The EPCs who keep their EMD, PBG and margin intact do a few things consistently.
- Read the RfS clauses first — know the EMD, PBG and LD terms before you cost the bid.
- Schedule with a buffer — price realistic timelines so LD does not eat your margin.
- Track validity dates — renew a PBG before it lapses; a lapsed PBG can be a default.
- Lock supply early — DCR module and pump lead times are the usual cause of delay.
- Keep records — dated notices, photos and reports protect you in any dispute.
Pair this with your tender document checklist so the money-at-risk clauses are read every time, not just on the bids you remember to check.
How SuryaHub helps you manage money at risk
EMD lost to a missed signature, a PBG that lapsed, LD that crept in unseen — these are tracking failures, not bad luck. SuryaHub records each EMD and PBG with its validity date against the right tender in its finance module, links execution milestones in government workflows so LD risk shows up early, and warns before a guarantee expires. SuryaHub is pre-revenue; the only real pilots are Suryantra Energy and RGESPL, and every figure here is an estimate to verify against the live RfS.
Never lose a PBG to a missed date
See how SuryaHub tracks EMD, PBG and LD risk across every tender.
Related guides
Frequently asked questions
What is the difference between EMD and PBG in PM-KUSUM?+
In PM-KUSUM, EMD is bid security you submit with your tender to show you are serious, and it is refunded if you do not win or after you sign. PBG is performance security you submit after award to guarantee you deliver and maintain the system. EMD is small and short; PBG is larger and lasts through O&M.
What are LD penalties in a PM-KUSUM tender?+
LD, or liquidated damages, are penalties a PM-KUSUM tender charges for late completion, usually a small percentage of the order value per period of delay, capped at a maximum. LD is deducted from your payment or the PBG. The exact LD rate and cap are set by each RfS, so verify them before you bid.
When is a PM-KUSUM PBG encashed?+
A PM-KUSUM PBG is encashed when an EPC fails to deliver, abandons the work, does poor or non-compliant work, or does not honour the O&M obligation. The buyer can also encash the PBG to recover liquidated damages. Encashment triggers vary by RfS, so confirm them against the specific tender at publish.
How long is a PM-KUSUM PBG valid?+
A PM-KUSUM PBG is usually valid through the project and the mandatory O&M period, often several years, with a claim window beyond that. Some tenders specify a fixed validity in months. The exact PBG validity is set by each RfS and was amended by MNRE, so verify it against the specific tender.
Is EMD refundable in PM-KUSUM?+
Yes, EMD in PM-KUSUM is normally refundable. Unsuccessful bidders get the EMD back after the bid process, and a winning bidder gets it back after submitting the PBG, or it is converted into the PBG. EMD is forfeited only if a bidder withdraws or refuses to sign after winning.
How does SuryaHub help track PBG, EMD and LD?+
SuryaHub records each EMD, PBG and its validity date against the right tender, links execution milestones so LD risk is visible early, and warns before a guarantee expires or a deadline slips. SuryaHub is pre-revenue; real pilots are Suryantra Energy and RGESPL, and all figures here are estimates to verify.
Sources & references
EMD, PBG and LD clauses come from the tender RfS and MNRE guidelines. Always confirm the current figures against the specific tender and the latest MNRE bank-guarantee amendment before you bid.
- SECI ↗
Model RfS and tender documents that set EMD, PBG and LD clauses.
- Ministry of New & Renewable Energy (MNRE) ↗
Scheme guidelines and bank-guarantee amendments.
- PM-KUSUM National Portal ↗
Scheme framework and state tender links.
Written by the SuryaHub team · reviewed against SECI, MNRE & PM-KUSUM portal sources · updated 19 June 2026.
Method: EMD, PBG and LD patterns are drawn from the sources above and re-checked every 30 days. All percentages, validity months and caps are estimates to verify against the specific tender RfS and the latest MNRE BG amendment. SuryaHub is pre-revenue; only Suryantra Energy and RGESPL are real pilots.
Change log: 19 Jun 2026 — first published.