NewKerala.com

Key Points

The National Highways Authority of India (NHAI) has achieved a significant milestone with insurance surety bonds crossing Rs 10,000 crore. Twelve insurance companies have issued nearly 1,807 surety bonds for bid and performance securities, representing a major shift in infrastructure project financing. The Ministry of Finance has recognized these bonds as equivalent to traditional bank guarantees, potentially reducing costs for contractors. This development aligns with India's ambitious infrastructure growth strategy, which aims to expand and modernize the national highway network.

Key Points: NHAI Surety Bonds Hit Rs 10,000 Crore Milestone

  • Insurance surety bonds cross Rs 10,000 crore landmark
  • 12 insurance companies issue 1,807 total security bonds
  • Ministry of Finance equalizes surety bonds with bank guarantees
  • Indian highway network expanded to 1.46 lakh km since 2014
2 min read

Insurance surety bonds for NHAI contracts cross Rs 10,000 crore landmark

Insurance companies issue 1,600+ surety bonds for NHAI contracts, marking a significant breakthrough in infrastructure financing

"Every rupee invested in highway development yields a threefold return to the GDP - Ministry of Road Transport & Highways"

New Delhi, Sep 11

Insurance Surety Bonds (ISB) issued by insurance companies for NHAI contracts have crossed the Rs 10,000 crore landmark, which represents a major achievement, according to a statement issued by the Ministry of Road Transport & Highways on Thursday.

Till July 2025, twelve insurance companies have issued around 1,600 ISBs as 'bid security' and 207 ISBs as 'performance security' valued at around Rs 10,369 crore for NHAI contracts.

NHAI has been encouraging the use of Insurance Surety Bonds as an additional mode of submitting bid security performance security deposit.

Insurance Surety Bonds are instruments where insurance companies act as 'surety' and provide the financial guarantee that the contractor will fulfill its obligation as per the agreed terms.

The Ministry of Finance has made e-BG and Insurance Surety Bonds at par with BGs for all Government procurements. The Insurance Surety Bonds, when issued, would be cost effective and provide adequate security for NHAI projects.

As part of the efforts to promote wider adoption of Insurance Surety Bonds (ISB) and Electronic Bank Guarantee (eBG), a workshop was organised by NHAI in the national capital.

The session was chaired by N.R.V.V.M.K Rajendra Kumar, Member (Finance), NHAI; Nilesh Sathe, Former Member, IRDA; senior NHAI officials, industry experts and representatives of various insurance and finance companies participated in the workshop.

As India is poised to become the world's third largest construction market, the requirement of Bank Guarantees in the Indian Infrastructure Sector is expected to grow by 6 to 8 per cent Year on Year basis.

Surety bonds act as a viable alternative to Bank Guarantees. ISB are cost-effective and could provide substantial relief for the Infrastructure Sector.

India's national highway network has expanded from 91,000 km in 2014 to over 1.46 lakh km today, making it the second-largest road network in the world, according to official figures compiled by the Ministry of Road, Transport and Highways.

The government's spending on road infrastructure has grown 6.4 times between 2013-14 and 2024-25.

Every rupee invested in highway development yields a threefold return to the GDP, unlocks vast employment opportunities and opens multiple channels for revenue generation, according to an official statement.

- IANS

Share this article:

Reader Comments

P
Priya S
Great to see India's infrastructure sector evolving! The shift from traditional bank guarantees to insurance bonds shows progressive thinking. Hope this translates into faster project completion and better road quality across the country.
M
Michael C
As someone in the construction industry, I can confirm this is a game-changer. The paperwork and collateral requirements for bank guarantees were overwhelming. Insurance bonds will definitely help smaller contractors compete with bigger players.
A
Ananya R
While this is positive news, I hope there's proper monitoring to ensure insurance companies don't take excessive risks. We've seen what happens when financial instruments become too relaxed. Safety and quality should remain top priorities 🛣️
V
Vikram M
From 91,000 km to 1.46 lakh km of national highways in just 10 years! That's incredible progress. The infrastructure development in our country is truly remarkable. These financial innovations will only accelerate the growth further.
S
Sarah B
The multiplier effect mentioned is impressive - every rupee in highway development giving threefold return to GDP. This kind of economic thinking is what developing nations need. Hope the benefits reach all sections of society.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50