Around 700 surety bonds worth Rs 3,000 cr issued by Insurance cos so far

About 700 insurance surety bonds valued at around Rs 3,000 crore have been issued by different insurance companies so far, an official statement said on Wednesday.

The statement further said state-owned NHAI has so far received 164 insurance surety bonds, consisting of 20 bonds for performance security and 144 bonds for bid securities.

Insurance surety bonds are financial instruments, where insurers act as 'surety' and provide the financial guarantee that the contractor will fulfil its obligation as per the agreed terms.

Wider adoption of such instruments will help to strengthen infrastructure development in the country.

According to the statement, the Ministry of Finance has made insurance surety bonds at par with bank guarantees for all government procurement, and NHAI has been urging insurance companies and contractors to use insurance surety bonds as an additional mode of submitting bid security, and /or performance security.

NHAI on Wednesday organised a workshop in New Delhi on the implementation of Insurance Surety Bonds (ISB) for NHAI contracts.

The objective of this workshop was to review the progress made in the implementation of Insurance Surety Bonds and encourage participation from the stakeholders for wider adoption of the instrument, the statement said.

Road, Transport and Highways Minister Nitin Gadkari on December 19, 2022, launched the country's first-ever surety bond insurance product to reduce the dependence of infra developers on bank guarantee.

The product, from the stable of Bajaj Allianz General Insurance, has been developed in response to a demand identified by the industry and government.