Insurance coverage firms have issued about 700 insurance coverage surety bonds valued about ₹3,000 crore after Centre makes the instrument on par with financial institution ensures for all authorities procurements.
Particulars had been shared by officers at a workshop on implementation of insurance coverage surety bonds in nationwide freeway contracts, organised by the Nationwide Highways Authority of India in New Delhi.
NHAI has obtained 164 insurance coverage surety bonds consisting of 20 bonds for efficiency safety and 144 of them for bid securities. Contractors are being urged to utilise the bonds as a further mode of submitting bid safety and or efficiency safety, the Ministry of Street Transport and Highways mentioned in a launch on Wednesday.
Insurance coverage surety bonds is a monetary instrument the place insurance coverage firms act as ‘surety’ and supply monetary assure that the contractor will fulfil the duty as per the agreed phrases. Wider adoption of such devices will assist strengthen infrastructure improvement within the nation, the Ministry mentioned.
In November 2023, NHAI had introduced that it has accepted insurance coverage surety bond for the primary time, for the monetisation programme of an upcoming bid of a Toll Function Switch (TOT) package deal. “This would be the first time this revolutionary instrument is being utilized as a financial institution assure within the street infrastructure sector for monetisation of bids,” it had mentioned.
