New Delhi: NHAI organised a workshop in New Delhi on the implementation of Insurance Surety Bonds (ISB) for NHAI contracts. The objective of this workshop was to review the progress made in the implementation of Insurance Surety Bonds and encourage participation from stakeholders for wider adoption of the instrument. The workshop was addressed by Rajendra Kumar, Member (Finance) NHAI; A. K. Singh, CGM (Finance) NHAI; N. B. Sathe, Advisor, NHAI; and Mandakini Balodhi, Director, Department of Financial Services. The workshop was attended by representatives from various Central Government Ministries & Departments, Insurance Companies, the Highway Operators Association of India (HOAI), and the National Highways Builders Federation (NHBF).
The Ministry of Finance, Government of India has made Insurance Surety Bonds on par with Bank Guarantees for all Government procurements, and NHAI has been urging insurance companies and contractors to use Insurance Surety Bonds as an additional mode of submitting Bid Security and/or Performance Security. NHAI has so far received 164 Insurance Surety Bonds consisting of 20 bonds for Performance Security and 144 bonds for Bid Security.
As per the information shared at the workshop, around 700 Insurance Surety Bonds valued at around Rs. 3,000 crores have been issued by different insurance companies so far. Recognizing the potential of ISB, the panelists during the workshop advocated for a wider adoption of the financial instrument for awarding NHAI contracts. The workshop also outlined various challenges and deliberated on possible measures that can be taken for faster adoption of the instrument.
Insurance Surety Bonds are a financial instrument where insurance companies act as ‘Surety’ and provide the financial guarantee that the contractor will fulfill its obligations as per the agreed terms. Wider adoption of such instruments will help to strengthen infrastructure development in the country. /BI
