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.

Related Stories

Gold Stories

Next Story
Products

Koemmerling opens Navi Mumbai experience centre

Koemmerling, a brand of the profine Group, has expanded its presence in the Mumbai metropolitan region with the opening of a new experience centre in Navi Mumbai and launched its Allure S46 minimal sliding door system for the Indian market.Located in CBD Belapur, the facility was inaugurated by Peter Mrosik, Owner and CEO, profine Group, along with Farid Khan, Chairman and Managing Director, profine India, and Kamal Bajaj, CEO, profine India.The company said the new centre will showcase its portfolio of uPVC and aluminium window and door systems to architects, developers and homeowners.The ina..

Next Story
Products

India's waterproofing market nears Rs 150 bn milestone

India's waterproofing industry is approaching a market size of Rs 150 billion and is expected to surpass the $2 billion milestone, according to speakers at the 2nd India International Waterproofers Conference & Expo 2026 organised by the Waterproofers Association of India (WAI) in New Delhi.The two-day event brought together more than 20 speakers, 55 international delegates and 53 exhibition booths, with discussions focusing on climate-resilient construction, advanced waterproofing technologies and international collaboration.Inaugurating the event, Durga Shanker Mishra, former Secretary, ..

Next Story
Real Estate

Dilip Buildcon Q1 FY27 Revenue at Rs 23.78 billion

Dilip Buildcon Limited reported consolidated revenue from operations of Rs 2,378 crore in Q1 FY27, along with EBITDA of Rs 429 crore and profit after tax of Rs 128 crore.Consolidated EBITDA margin stood at 18.1%, improving from 17.1% in Q4 FY26. On a standalone basis, revenue from operations was Rs 1,930 crore, EBITDA stood at Rs 199 crore and PAT was Rs 39 crore, with an EBITDA margin of 10.3%.The company’s order book stood at Rs 27,691 crore as of 30 June 2026, compared with Rs 28,830 crore as of 31 March 2026. Roads and highways accounted for 17.1% of the order book, irrigation and water ..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement