Public procurement is associated with the development of budget funds. In order for this process to proceed efficiently, the institution of bank guarantees was legislatively introduced in Russia. One of the tools for providing them was a special state register.
What it is
The register of bank guarantees was created thanks to the idea of the Federal Antimonopoly Service of Russia. The employees of this department decided that at the legislative level it was necessary to approve a mechanism that would allow organizing an additional degree of protection for state customers from the actions of unreliable suppliers. According to some experts, this could help to spend budget funds more efficiently.
This mechanism is called the “register of bank guarantees”. This is an information base (technically an online resource) on which information is published about financial institutions and guarantees that they issue in order to ensure their obligations with regard to state or municipal contracts.
Legal framework
Public procurement is a phenomenon in which cash flows come from the budget. It is especially important that their uncontrolled “development” does not occur, that suppliers (performers) perform paid work and provide services in full. And in case they can’t do this, for someone to compensate for the losses of the state customer. In April 2014, the new version of Federal Law No. 44 came into force, according to which the bank must guarantee compensation for losses with which the supplier has concluded an appropriate type of agreement.
What are bank guarantees
Russian laws require that firms applying for the role of an executor, or a provider of services within the framework of public procurement, have bank guarantees - the obligations of financial institutions will be settled with the customer if, for some reason, the contractual obligations on the part of the executor are not fulfilled. Sometimes bank guarantees are also applied in non-governmental business segments, but 80% of the turnover of this segment, according to some analysts, relates specifically to public procurement.
If the supplier does not have such a guarantee, he cannot participate in tenders or auctions. The financial institution, in turn, receives remuneration (percentage or a fixed amount) from the latter - under the contract. An important factor on which to determine whether a bank guarantee will be issued is the register of banks that are allowed to interact with suppliers as part of public procurement. About him a little later.
Warranties under the registry
As soon as the guarantees fall into the register, they acquire the status of mandatory. They cannot be recalled. That is, as soon as the guarantee falls into the registry, it can be considered genuine and not subject to cancellation or adjustment. Customers can confidently enter into contracts with suppliers.
The register of bank guarantees includes data on participants in the public procurement market. The following information is indicated.
Firstly, it is data about the bank (name, address, TIN).
Secondly, this is the amount of the amount that the guarantor bank will pay to the customer if the supplier does not fulfill its obligations under the state or municipal contract.
Thirdly, this is the data (address, name, TIN) of the supplier or contractor.
Fourth, this is a list of obligations of the contractor, which are provided by the same bank guarantee.
The registry contains a number of additional information. For example, the conditions under which the guarantor will fulfill its obligations (transfer funds to the customer), the period during which the bank guarantee is valid.
How to get a guarantee from the bank?
Not every willing supplier can get a bank guarantee without fail. There are certain requirements. Among them - the availability of access to the implementation of relevant work, licenses, permits, etc. Some experts note the intensification of the work of firms involved in assisting in obtaining such documents, as well as those that provide consulting services for obtaining bank guarantees. Among other documents important for a credit institution are those that confirm the financial viability of the contractor (for example, bank statements).
The supplier provides all the necessary documents to the financial institution, after which a decision is made whether or not to issue a bank guarantee. True, not immediately: the law requires a procedure for verifying information about the supplier (this mainly concerns information about the owners and accounting). This, according to some lawyers, is associated with the need to identify dummies.
A guarantee can only be issued by a bank that is registered in a special list, as mentioned above (it is also sometimes called the “Ministry of Finance register” - bank guarantees as an institution of financial policy are largely regulated by this department). If a financial institution has decided to issue a guarantee, then, together with the documents, the bank also provides an extract from the state register. This completely eliminates the issue of fake documents.
What happened before the registry
To meet the requirements of the law on public procurement, many organizations applying for the conclusion of contracts bought fake government guarantees. This was done in a variety of ways - from calls to brokers' ads on the Internet to personal contacts with bankers.
Suppliers, of course, won in price - the cost of processing very similar to real, but still fake financial documents was many times lower than on legal conditions of banks. If a situation arose when the supplier really could not (or intentionally ceased) to fulfill its obligations under the contract with the state customer, then there was no one to compensate for the losses of the budget. Banks did not recognize payment obligations, since the documents were not real, or, legally drawn up, were incorrect, and therefore had no effect.
Illegal actions with bank guarantees were committed by a variety of entities - brokers, bankers themselves. They issued fake documents to suppliers on behalf of a financial institution, which itself was not aware of this and did not record the existence of guarantees in their registers. Some organizations practiced the issuance of the so-called “gray” varieties of fake guarantees - when the management of a financial institution was aware of such transactions, however, it did not deposit money on the balance sheet in case the supplier failed to fulfill its obligations.
Market reaction
A number of analysts believe that the register of bank guarantees is useful in that it allows dealing with suppliers without any particular concerns. Financial institutions themselves have also shown enthusiasm. When the regulatory register of bank guarantees of 44 Federal Laws entered into force, several hundred banks were registered in the relevant databases in order to be able to participate in public procurement on legal grounds.
Analysts believe that entire sectors of the economy invested by the state, in particular the construction sector, were more confident. There were frequent cases when contractors, having received budget investments, were not able to fully fulfill their contractual obligations. Now this probability, experts say, is minimized.
Registry Guarantee Effectiveness
A unified register of bank guarantees appeared in Russia in April 2014. By that time, as many participants in the public procurement market admitted, the frequency of occurrence of fake guarantees, as we already mentioned above, was off the scale. But since the introduction of the registry, many banks have ceased to deal with this phenomenon in general, others have stated that the number of fake obligations has decreased significantly. Experts note that a large number of market players were eagerly awaiting the adoption of relevant amendments to the existing Federal Law "On the contract system of public procurement."
In the field of public procurement, a financial instrument such as a bank guarantee is very popular. When signing a contract for the supply of goods, services, works, this document serves as a guarantee of the fact that the contractor (supplier) will strictly and on time fulfill its obligations. In this case, the guarantor is the bank issuing this document at the request of the contractor and providing it to the state customer.
According to a number of analysts, the demand for legal papers from banks has increased, market participants have cheered on the register of bank guarantees. Where can I see data about a particular bank or supplier? This can be done on the public procurement website (zakupki.gov.ru).
Principles of working with the registry
Reconciliation of information on guarantees (the one provided by the supplier and the one indicated in the register) is performed by the state customer. If there are significant discrepancies or the supplier provided completely different data, the state customer agrees not to have business with such a partner. In turn, the supplier is entered in another list containing information about unscrupulous market participants. The register of issued bank guarantees is available, as mentioned above, on the website of public procurement.