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Singapore Launches eGuarantee@Gov To Digitalise Banker’s Guarantees And Insurance Bonds
We first need to understand why we need banker's guarantees and insurance bonds for a business. Banker's guarantee is one component of the contractual requirements that needs to be mentioned for safeguarding and assuring ,for example, suppliers of goods, leasing/renting business premises, and fees, levies and taxes processes of organizations (all sorts of financial proceeds) in that payment is guaranteed not just by the company, but also by the bank providing the BG.
This helps smoothen transactions between the parties involved (i.e. entailing companies in the contract).
For insurance bonds, business needs to mandate them according to their clients such as construction company undertaking a project to indemnify insurance bonds for high valued claim and so on depending on the nature of the business.
A Simple & Secure Digital Process
On 2 November 2022, The Ministry of Finance (MOF) and the Monetary Authority of Singapore (MAS) announced the successful launching of eGovernment@Gov, an online easy-to-process service jointly developed with the Association of Banks in Singapore (ABS) and in consultation with the General Insurance Association of SIngapore (GIA) for businesses and individuals.
With eGuarantees@Gov, business and individuals can forget about the long hauling current practice of applying to a financial institution (FI) for a paper guarantee, and the physical presence or licensing obligations following the physical submission process from applying to sending bond to government agency in person. Instead, they can apply for via e-submission with ease from current participating FI’s via their websites or email for guidance submission to 17 governmental organizations. Below we have included more information on application procedures that business users will need when doing e-submission with different banks.
Paper documents that once took days to gather and deliver to offices will no longer be necessary. The new online system doesn't need to go through legal vetting because it employs standardized texts. Plus it can all be done within one working day.
Due to the eGuarantees being transmitted over Singapore Customs' Networked Trade Platform, it increases data security and safer transmission (NTP).
Editor's Take: Advancement in the Digital Technology
This initiative will lead to greater acceptance of digital guarantees from all parties as Singapore moves towards a greener and more sustainable economy.
eGuarantee is part of an initiative by the government to improve services through digitalisation efforts. In addition, partnering up with the financial industry has enabled added value for businesses and individuals in ways of facilitating greater efficiency in processing guarantees and eliminating the operational risks associated with manual paper-based workflows.
All of Singapore's earlier investments in its digital infrastructure helped pave the way for basic financial services, including bank transfer payments, to migrate to online channels.
Once these economies are established, companies in Singapore can access various capabilities including financial education, financial service, and government support through an open digital infrastructure.
The program as innovation scheme has produced a number of beneficial effects, such as the creation of over 200 employment through the opening of new technology labs, the acceleration of industry efforts to adopt novel technologies in business sectors (digitalisation of businesses), and the aiding of young startups in becoming successful businesses with a solid connection to finance.
“This is a win for both financial institutions and their customers,” says Marcus Lim, assistant managing director of Banking and Insurance at MAS.
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