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Rs 3,000 Crore worth of 700 Insurance Surety Bonds issued

Recently, NHAI in a workshop on implementation of Insurance Surety Bonds (ISB) for NHAI contracts shared that around 700 insurance surety bonds with a combined value of approximately Rs 3,000 crore have been successfully issued by various insurance companies to date.

Insurers, under ISBs, act as a surety and provide the financial guarantee that the contractor will complete its obligation as per the agreed terms. India’s first-ever surety bond insurance product was launched in December 2022 to reduce the dependence of infrastructure developers on bank guarantees.

NHAI has to date received 164 ISBs which comprises 20 bonds for performance security and 144 bonds for bid securities. To strengthen infrastructure development in the country it is recommended to adopt ISBs as a lead financial instrument.

The insurance surety bonds are equivalent to bank guarantees for all procurements by the government. Hence, NHAI is recommending to all contractors and insurance companies to adopt and utilize insurance surety bonds as an alternate mode for bid security, and/ or performance security submission.

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