~ fixCf)lx Government of India~ JOj?lI(1~Ministry of Railways

(~ m-t) (Railway Board)

No. 2018/CE-IJCT/9 New Delhi, Dated O~06.2018

ToAs per list attached

Sub: Inclusion of 'Letter of Credit' as Mode of Payment in Works Tenders orService Tenders

Ref: (i) Railway Board's letter No. 2017/AC-II/9/l0 Pt 3 dated 09.05.18(ii) Railway Board Letter No. 2017/AC II/9/10 Pt I, dated 20.02.18

1. It has been decided by Board (MRS, MTR, ME, FC, CRB) that henceforth, allworks tenders or service tenders invited by railways through e-tendering onIREPS, having advertised value of Rs 10 lakh and above, shall include intender conditions, an option for the contractor to take payment from Railwaysthrough a letter of credit (LC) arrangement.

2. As such, following special conditions shall be included in the works tenders orservice tenders to be invited henceforth:(i) For all the tenders having advertised cost of Rs 10 lakh or above, the

contractor shall have the option to take payment from Railways througha letter of credit (Le) arrangement.

(ii) This option of taking payment through Le arrangement has to beexercised in IREPS (Indian Railway Electronic Procurement System -the e-application on which tenders are called by Railways) by thetenderer at the time of bidding itself, and the tenderer shall affirmhaving read over and agreed to the terms and conditions of the LCoption.

(iii) The option so exercised, shall be an integral part of the bidder's offer.(iv) The above option of taking payment through LC arrangement, once

exercised by tenderer at the time of bidding, shall be final and no changeshall be permitted, thereafter, during execution of contract.

(v) In case tenderer opts for payment through LC, following shall be theprocedure to deal release of payment through LC:.(a) The Le shall be a sight LC(b) The contractor shall select his Advising/Negotiating bank for LC The

incidental cost towards issue of Le and its operation thereof shall beborne by the contractor.

(c) SBI, New Delhi, Main Branch will be the nodal branch for issue ofLCs based on online requests received from Railway Accounts Unitsfor tenders opened in financial year 2018-19. SBI branches wherethe respective Railway Accounts Office has its Account (local SB1branch) will be the issuance/reimbursing branch for LC issuedunder this arrangement. The Bank shall remain same for this tendertill completion of contract. The incidental cost @0.15% per annumof LC value, towards issue of LC and operation thereof shall beborne by the contractor and shall be recovered from his bills.

(d) The LC shall be opened initially for duration of 180 to 365 days inconsultation with contractor. The LC shall be extended time to timeas per the progress of the contract, on the request of the contractor.The value of LC to be opened initially as well as extended thereaftershall be finalised by the engineer in consultation with the contractoron the basis of expected progress of work.

(e) The LC terms and conditions shall inter-alia indemnify and saveharmless the Railway from and against all losses, claims anddemands of every nature and description brought or recoveredagainst the Railways by reason of any act or omission of thecontractor, his ,agents or employees, in relation to the Letter ofCredit (LC). All sums payable/borne by Railways on this accountshall be considered as reasonable compensation and paid bycontractor.

(/) The LC terms and conditions shall inter-alia provide that Railwayswill issue a Document of Authorisation (format enclosed asAnnexure 2) after passing the bill for completed work, to enablecontractor to claim the authorized amount from their bank.

(g) The acceptable, agreed upon document for payments to be releasedunder the LC shall be the Document of Authorisation.

(h) The Document of Authorisation shall be issued by Railway AccountsOffice against each bill passed by Railways.

(i) On issuance of Document of Authorisation, a copy of Document ofAuthorisation shall be posted on IREPS for download by thecontractor. A digitally signed copy of Document of Authorisationshall also be sent by Railway Accounts Office to Railway's bank(Local SBI Branch).

(j) The contractor shall take print out of the Document of Authorisationavailable on IREPS and present his claim to his bank (advisingBank) for necessary payments as per LC terms and conditions. The

rI

claim shall comprise of copy of Document of A uthorisation, Bill ofExchange and Bill.

(k) The payment against LC shall be subject to verification fromRailway's Bank (Local SBI Branch).

(I) The contractor's bank (advising bank) shall submit the documentsto the Railway's Bank (Local SBI Branch).

(m) The railway's bank (issuing bank) shall, after verifying the claim so

received w.r.t. the digitally signed Document of Authorisationreceived from Railway Accounts Office, release the payment tocontractor's bank (advising bank) for crediting the same tocontractor's account.

(n) Any number of bills can be dealt within one I.C, provided the sumtotal of payments to contractor is within the amount for which LChas been opened.

(0) The LC shall be closed after the release of final payment includingP VC amount, if any, to the contractor.

(p) The release of performance guarantee or security deposit shall bedealt directly by railway with the contractor i.e., not through LC.

3. For opening of LC, executive department shall make a request letter toconcerned Accounts Department on a format, placed as Annexure - 1.

4. Necessary changes in IREPS and IPAS e-applications have already beencarried out, for having option for payment to contractors through LC.

5. This issues with the concurrence of Finance Directorate of Ministry ofRailways. ~Y"

(W1mm~).j

~~fCf) / fflfcl(>l $vl'jFa=lJ:l~dl(~) / ~ m-g[Rly no. 030-44803, MTNL No.-O 11-23383379]

No.2018/CE-I/CT/9Copy forwarded for information to:

New Delhi, Dated 04.06.2018

(i) PFAs, All Indian Railways.(ii) Dy. Comptroller and Auditor General of India (Railways), Room No. 224,

Rail Bhawan, New Delhi.

~.For Financial Commissioner/Railways

Copy: MD/CRIS for information and necessary action.

--.1.la.lb.2.3.4.5.6.7.8.9.10.

Copy to:

(A)

LIST FOR DISTRIBUTION

General Managers, All Indian Railways & Production Units.General Manager (Con), N.F. Railway, Guwahati.General Manager ICORE, Allahabad.Principal Chief Engineers, All Indian Railways.Chief Administrative Officers (Con), All Indian Railways.(Except N.F. Railway)PFAs All Indian Railways.ChiefYigiiance Officers, All IndianRailways,CAO, COFMOW, Tilak Bridge, New Delhi.CAO(R), Diesel Loco Modernisation Works, Patiala(Punjab).CAO, Rail Coach Factory/Rae Bareli Project, Kishanganj, Delhi -110007.CME, lROAF, 12th Floor, Core-L, Scope Minar, Distt. Centre, Laxmi Nagar, Delhi- I 10092CAO (Workshop Projects), Chamber Bhawan, Judge's Court Road, Anta Ghat, Patna-80000 LBihar.

1. Director General, RDSO, Manak Nagar, Lucknow.2. Director General, Railway Staff College, Vadodara3. Director, IRICEN, IREEN, IRIMEE, IRISET, RPF Academy.

(B)

I. MD, DMRC, Metro Bhawan, 13, Fire Bridge Lane. Barakhamba Road, New Delhi- 11000 I.2. MD, CONCOR, Concor Bhawan, C-3, Mathura Road, Opp. Apollo Hospital, New Delhi-

110076.3. IRCON International Limited, C-4, District Centre, Saket, New Delhi- 1100174. MD, RITES Ltd., RITES Bhawan, Plot No.1, Sector-29, Gurgaon.5. MD, RVNL, August Kranti Bhawan,Plot No.25, J stFloor, Bhikaji Cama Place, New Delhi.6. MD, MRVC Ltd., Churchgate Station Bldg, Mumbai- 4000207. MD, KONKAN Railway Corporation Ltd, Rail Bhawan, New Delhi-IlOOO!.8. MD, DFCCIL, 5th Floor, Pragati Maidan Metro Station Building Complex, New Delhi-I 100019. MD, RLDA, Near Safdarjung Railway Station, Moti Bagh, Phase-I, New Delhi- 11002110. MD, CRlS, Chanakyapur, New Delhi.11. CMD. RailTel Corporation of India-Ltd. Plot No. 143. Institutional Area, Sector-44, Gurgaon _

122003.

Copy to:

CRB, ME, MT. M(Tr.), M(RS), FC, DG(S&T), DG(RS), DG(RHS). DG(RPF), AM(CE).AM(Works), AM(B), AM(Elec.). AM(RS), PED(Projects), PEDiSDE. PED(Bridges).PED(Vigilance), PED/Transformation, EDCE(P), EDTK(M), EDTK(MC), EDTK(P), EDCE(B&S),EDF(X)-I, EDF(X)-fI. ED(Works). EDW(Plg.). ED/Project(Mon.), ED(L&A). ED!SDE, ED(PSU).

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I

Annexure -1

Request letter from Executive branch to Accounts Office for opening of LC

Office of--------Railway

No. _ Dated _

The PFAJ Sr.DFMI Dy. FAHQ! Division! Workshop! Cost

.•.•.•

Sub: Opening of LCRef: Supply Order/ Contract Agreement No .

It is requested to open a sight LC against the above referred Order/ Agreement in favour of

______ . The details of beneficiary are as under:

Name of Contractor/SupplierVendor CodeAddressTender No.Contract Agreement No.Description of Goods/ ServiceValue of ContractStages of paymentExpected payment within 6 months (LC Amount)Beneficiary bank details:

a) Bank nameb) Addressc) Account No.d) IFSC code

It is certified that the supplier/ contractor has exercised the option of taking payment due

against the tender, through LC arrangement in lREPS portal at the time of bidding itself and the

option has been flagged in the IREPS. This has the approval of _

(i)(ii)(i i i)(iv)

(v)(vi)(vii)(v iii)(ix)(x)

v~ olt'~ / Pu.i~ 1,o-r ~~ L c.. V) +0~ op~~. (Signature)

Name: _

Designation: _(Official Seal)

Anncxurc-J

• LCOA No_ (IS DIGIT IP/\S GENERATED ~().)Dated: _

nOCliMENT OF AUTHORIZATION

Reference: (i) Works Contract! Supply Contract No O:lted _(ii) Inland Letter of Credit No. Dated _

This document is issued against contract No.----(FROM IREPSl-------- dalcd-------Ior supply/_ work lJ: ---

! DESCRIPTION OF GOODS! WORK FROM IREPS)--------------

The beneficiary ofthe atorementioned Letter ofCredit Mis ... (NAME AND VENDOR CODI:) ... (Vendor

Code as per IRPES ) is entitled to receive payment. aggregating iNR .. ~$S$ (FR01\·1 AI~STRACT 01'

BILL P:\SSED) .. out of a total LC amount 01' INR ... (FRO;v\ l'v1ASTER TABLE OF LC

')PEN ED 1. against the first/second" commercial Invoice No.( FROf\·1 IPAS l dated

FROM IPAS _ lor INR(FROM IPAS )----------- raised against the above contract from State I~an\.:or

!ndia-----(branch-FROM LC MASTER TABLE)--- _ on the strength of this Ceniticate.

The details or payments already made to the beneficiary under this Letter or Credit arc as Iollows:

· S. i'o'o.!lnvoice No. Invoice date Invoice .Amount 1LCDA No. LeOA date I Amount paid --Ii (INR) .! (l:'\R)

· 1 ~----------+_------------~---------~----------~!. _'---or --------1: !

----rl---------r~~----------~------------~--------1_----------~--------------, I__ -'.I ---L ~ __ ___L -+ ~· 1'01:11 Paid

THIS P;\ YI\.'IENT: - $SS ~_

LC [3;\LANCE AFTER THIS PAYrv1E~T:

(Signature of aut hori sed Railway authoruy!

Designation

Official S<!;ll

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