NHAI has accepted Insurance Surety Bond for the monetization program of the upcoming bid of Toll Operate Transfer (TOT) Bundle 14.
Key points
- This will be the first time this innovative instrument is being utilized as a Bank Guarantee (BG) in the road infrastructure sector for monetization of bids.
- NHAI has been working closely with Highway Operators Association of India (HOAI), SBI General Insurance and AON India Insurance to implement this initiative.
- Issuance of Insurance Surety Bond will set a new benchmark for the industry, highlighting the importance of innovative financial solutions in the evolving landscape of road infrastructure development.
- It will encourage private participation in the highway sector and will be a significant step towards facilitating ‘Ease of Doing Business’.
About Insurance Surety Bonds
- Insurance Surety Bonds are instruments where insurance companies act as ‘Surety’ and provides the financial guarantee that the contractor will fulfil its obligation as per the agreed terms.
- Ministry of Finance, Government of India has made e-BG and Insurance Surety Bonds at par with Bank Guarantees for all Government procurements.
- Instruments like Insurance Surety Bonds will help to strengthen National Highway Infrastructure development, which has cascading positive impact on Indian economy.
