Insurance companies have issued about 700 insurance surety bonds valued about ₹3,000 crore after Centre makes the instrument on par with bank guarantees for all government procurements.
Details were shared by officials at a workshop on implementation of insurance surety bonds in national highway contracts, organised by the National Highways Authority of India in New Delhi.
NHAI has received 164 insurance surety bonds consisting of 20 bonds for performance security and 144 of them for bid securities. Contractors are being urged to utilise the bonds as an additional mode of submitting bid security and or performance security, the Ministry of Road Transport and Highways said in a release on Wednesday.
Insurance surety bonds is a financial instrument where insurance companies act as ‘surety’ and provide financial guarantee that the contractor will fulfil the obligation as per the agreed terms. Wider adoption of such instruments will help strengthen infrastructure development in the country, the Ministry said.
In November 2023, NHAI had announced that it has accepted insurance surety bond for the first time, for the monetisation programme of an upcoming bid of a Toll Operate Transfer (TOT) package. “This will be the first time this innovative instrument is being utilized as a bank guarantee in the road infrastructure sector for monetisation of bids,” it had said.
