Gadkari wants surety bond insurance, not bank guarantee for infra projects

Launches country's first surety bond product, says instrument offers relief to contractors; govt has built in safeguards to protect insurers as well

More than two years after it was first announced, India’s first surety bond insurance product for highway contractors, a product of Bajaj Allianz Insurance, was launched by Union Minister for Highways and Road Transport, Nitin Gadkari, on Tuesday.

Seeking rapid growth for the product, Gadkari said he would approach the finance ministry to make surety bonds a prerequisite for infrastructure projects, instead of a bank guarantee.

Surety bonds are guarantees of payment issued by general insurers that protect the principal from losses in case the contractor fails to meet its obligations under the contract. However, they’re different from bank guarantees,