Business Standard

Why infra projects need surety bonds

According to a report by Aon, the financial services firm, the global contract surety market was worth $6.5 billion in terms of premiums in 2018


Vinayak Chatterjee
For a few years now, one of the key stress points in the construction and infrastructure sector has been bank guarantees (BGs). With the known deterioration of the balance sheets of contractors and associated service providers, such as consulting engineers, or operation and maintenance providers, coaxing banks to issue a BG to the project owner assuring that the service provider concerned will meet all obligations has become a serious bottleneck.

This has often led to service providers struggling with BG limit availability and liquidity requirements for margins. For the uninitiated, a Rs 100 BG will typically require a Rs 10 cash-down,
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Dec 31 2020 | 10:47 PM IST

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