+
NHAI explores Surety Bonds over Bank Guarantees for project security
ROADS & HIGHWAYS

NHAI explores Surety Bonds over Bank Guarantees for project security

The National Highways Authority of India (NHAI) has organised a high-level meeting aimed at discussing various facets to uncover opportunities and eliminate operational constraints to encourage broader acceptance of surety bonds as substitutes for bank guarantees.

According to the Ministry of Road Transport & Highways, the collaborative brainstorming session with stakeholders encompassed diverse perspectives, aiming to explore avenues and remove practical barriers to foster wider adoption of surety bonds in lieu of traditional bank guarantees (BGs).

NHAI has appealed to insurance companies and contractors to consider adopting insurance surety bonds as an additional method for presenting bid security and performance guarantees. These bonds, once issued, are expected to offer cost-efficiency while ensuring substantial security for NHAI projects.

Insurance surety bonds function as financial instruments where insurance firms act as 'Surety,' delivering a financial assurance that contractors will fulfil their obligations as per the mutually agreed terms. The Ministry of Finance, government of India, has equated electronic BGs and Insurance Surety Bonds with conventional BGs for all government procurement processes.

Globally, the surety insurance market commands a size of approximately $29.5 billion, but India's involvement in this market has been limited thus far. Anticipated to become the world’s third-largest construction market, India's Infrastructure Sector alone is projected to necessitate about Rs 2.70 trillion worth of bank guarantees in 2023, with an expected annual growth rate of 6 to 8 per cent.

The National Highways Authority of India (NHAI) has organised a high-level meeting aimed at discussing various facets to uncover opportunities and eliminate operational constraints to encourage broader acceptance of surety bonds as substitutes for bank guarantees.According to the Ministry of Road Transport & Highways, the collaborative brainstorming session with stakeholders encompassed diverse perspectives, aiming to explore avenues and remove practical barriers to foster wider adoption of surety bonds in lieu of traditional bank guarantees (BGs).NHAI has appealed to insurance companies and contractors to consider adopting insurance surety bonds as an additional method for presenting bid security and performance guarantees. These bonds, once issued, are expected to offer cost-efficiency while ensuring substantial security for NHAI projects.Insurance surety bonds function as financial instruments where insurance firms act as 'Surety,' delivering a financial assurance that contractors will fulfil their obligations as per the mutually agreed terms. The Ministry of Finance, government of India, has equated electronic BGs and Insurance Surety Bonds with conventional BGs for all government procurement processes.Globally, the surety insurance market commands a size of approximately $29.5 billion, but India's involvement in this market has been limited thus far. Anticipated to become the world’s third-largest construction market, India's Infrastructure Sector alone is projected to necessitate about Rs 2.70 trillion worth of bank guarantees in 2023, with an expected annual growth rate of 6 to 8 per cent.

Next Story
Technology

Six ways a smarter workflow leads to faster, more accurate bids

In today’s fast-paced civil construction environment, estimators need more than just solid numbers. They need smart, streamlined processes. This article explores six key ways connected workflows can transform the estimated approach, help in minimising risk, move faster, and improve accuracy. By integrating tools, data, and teams, one can produce stronger bids with less rework, fewer surprises, and more confidence. As an estimator, the job goes beyond producing numbers. They are responsible for delivering bids that are fast, accurate, and built to win. In today’s civil construction ind..

Next Story
Real Estate

Experion Launches Women-Only Co-Living Project in Greater Noida

Experion, part of Singapore-based AT Capital Group, has launched its first co-living space under its managed rental housing brand, VLIV, in Greater Noida. The all-women residence features 730 twin-sharing beds with a strong focus on safety, comfort, and well-being. VLIV has committed a $300 million investment to create a structured, service-led rental housing ecosystem in India. The brand aims to scale up to 20,000 beds in the next few years, with a long-term target of 100,000 beds nationwide. “India’s rental housing is fragmented. VLIV is our way of building long-term, dependabl..

Next Story
Infrastructure Urban

Officine Maccaferri Acquires CPT to Bolster Tunnelling Tech

Ambienta’s platform company, Officine Maccaferri S.p.A., has acquired CPT Group, a leading Italian developer of robotic prefabrication systems and digital control technologies for mechanised tunnelling. The move positions Maccaferri as a global player in integrated tunnelling solutions, blending traditional and advanced mechanised systems. Based in Nova Milanese, CPT serves major global contractors across Europe, Southeast Asia, and Australia. The company offers robotic prefabrication (Robofactory), productivity-monitoring software for Tunnel Boring Machines (TBMs), and eco-designed spa..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?