BG vs Surety Bond cost calculator
See the real tradeoff: a BG can look lighter on fees after FD interest, but it locks margin money. Surety usually costs a premium — and frees that working capital for your sites.
Shared inputs
Instrument value and tenure apply to both sides.
BG / surety bond face value
Full claim period including claim period, if any
Applied on BG commission / surety premium
Bank Guarantee
% of instrument amount parked as FD
Interest earned on BG margin FD
Surety Bond
% of instrument amount locked
Leave 0 if collateral earns nothing
Working capital freed with surety
₹75,00,000
A BG locks ₹1,25,00,000 as margin. Surety locks only ₹50,00,000— so that cash stays in your business for materials, labour and new bids.
Fee tradeoff for that liquidity
Surety fees run ₹11,36,500 higher than BG over 12 months (incl. GST) — against ₹75,00,000 kept usable in the business.
Bank Guarantee
₹1,25,00,000
Working capital locked as margin
Effective -0.74% p.a. on fees
Surety Bond
₹50,00,000
Collateral / margin locked
Effective 1.53% p.a. on fees
Working capital freed = BG margin − surety collateral. Net fee cost = commission or premium + GST, minus any interest earned on locked margin. A lower fee on BG can still leave a large cash block sitting idle — surety trades a premium for liquidity. Figures are indicative only.
What contractors should look at
Working capital locked
BG margin sits in an FD until the guarantee ends. Surety typically asks for little or none — that cash stays on your balance sheet.
Fee tradeoff
Compare commission vs premium (with GST and FD interest). The fee gap is what you pay — if anything — for keeping margin money free.
Liquidity vs line item
A lower BG fee still leaves capital blocked. For growing contractors, usable cash often outweighs a thinner commission.
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Get a free quoteCalculator FAQs
Why does a surety bond free working capital?
A cash-margin BG parks a large FD (often most or all of the guarantee amount) for the full tenure. A surety bond typically needs little or no cash collateral — so that money stays available for materials, labour, mobilisation and the next tender.
Isn’t BG cheaper on fees?
Sometimes yes — especially after FD interest on margin. This calculator separates that fee picture from capital locked. Many contractors still prefer surety because keeping margin money usable matters more than a lower commission line.
How is net fee cost calculated?
BG: commission for the tenure (optionally + 18% GST) minus FD interest on margin. Surety: premium (optionally + GST) minus any interest earned on cash collateral, if the insurer parks margin in an interest-bearing instrument. Margin itself is capital locked, not an expense — shown separately as working capital.
Should I include GST?
Bank BG commission and insurance surety premiums typically attract 18% GST. Toggle “Include 18%” for an all-in fee view, or “Exclude” to compare base rates only.
Are these rates binding quotes?
No. This calculator is for indicative comparison only. Actual commission, premium, margin and collateral depend on your credit profile, instrument type, tenure and the issuing bank or insurer.