New Delhi: The National Highways Authority of India (NHAI) organized a workshop in New Delhi to discuss the implementation of Insurance Surety Bonds (ISB) for NHAI contracts. The workshop aimed to assess the progress made in implementing ISBs and encourage greater participation from stakeholders to promote wider adoption of this financial instrument.
Key figures from NHAI, including Rajendra Kumar, Member (Finance); A. K. Singh, CGM (Finance); N. B. Sathe, Advisor; and Mandakini Balodhi, Director from the Department of Financial Services, addressed the workshop. Representatives from various Central Government Ministries & Departments, Insurance Companies, Highway Operators Association of India (HOAI), and National Highways Builders Federation (NHBF) also attended the event.
The Ministry of Finance, Government of India, has elevated Insurance Surety Bonds to the same level as Bank Guarantees for all government procurements. NHAI has been actively promoting the use of ISBs as an alternative mode for submitting Bid Security and/or Performance Security. To date, NHAI has received 164 Insurance Surety Bonds, comprising 20 bonds for Performance Security and 144 Bonds for bid securities.
During the workshop, it was revealed that approximately 700 Insurance Surety Bonds, valued at around Rs. 3,000 crores, have been issued by different insurance companies. Recognizing the potential of ISBs, panelists advocated for their wider adoption in the awarding of NHAI contracts. The workshop also identified various challenges and discussed possible measures to expedite the adoption of this financial instrument.
Insurance Surety Bonds function as a financial guarantee provided by insurance companies, ensuring that contractors fulfill their obligations as per the agreed terms. The broader adoption of such instruments is expected to strengthen infrastructure development in the country, facilitating smoother project execution and enhancing investor confidence in the sector.