NHAI seeks industry view to enhance usage of insurance surety bonds

The National Highways Authority of India (NHAI) is advocating the use of insurance surety bonds into NHAI contracts, in an effort to alleviate liquidity difficulties in the construction sector.
This initiative seeks to overcome operational challenges and encourage broader adoption of surety bonds as an alternative to bank guarantees (BGs). NHAI is encouraging insurance companies and contractors to assess the viability of insurance surety bonds for bid security and performance security deposit. This move aligns with the Ministry of Finance’s decision to equate e-BGs and insurance surety bonds with BGs in government procurements.
Surety bonds offer a cost-effective means of financing contract security, potentially releasing around Rs 500 billion for the infrastructure sector.