According to a statement issued after a day-long workshop on the implementation of insurance surety bonds (ISB) for NHAI contracts, NHAI stated, "Around 700 insurance surety bonds valued at around Rs 30 billion have been issued by different insurance companies so far."
The workshop aimed to assess the progress made in implementing Insurance Surety Bonds and to promote participation from stakeholders for broader adoption of the instrument.
Representatives from various central government ministries and departments, insurance companies, the Highway Operators Association of India (HOAI), and the National Highways Builders Federation (NHBF) attended the workshop, where NHAI members addressed the audience.
The finance ministry has equated insurance surety bonds with bank guarantees for all government procurements. NHAI has been encouraging insurance companies and contractors to utilize this instrument as an additional means of submitting bid security or performance security.
NHAI stated, "Recognizing the potential of ISB, the panellists advocated for a broader adoption of the financial instrument for awarding NHAI contracts, while discussing various challenges and potential measures for faster adoption of the instrument."
Insurance surety bonds function as a financial instrument, where insurance companies serve as 'Surety' and offer the financial guarantee that the contractor will fulfill its obligations according to the agreed terms. NHAI believes that wider adoption of such instruments will bolster infrastructure development in the country.
