NHAI hosts workshop to promote Insurance Surety Bonds for contracts

The event aimed to review the progress of ISB implementation and encourage wider adoption among stakeholders.

The National Highways Authority of India (NHAI) recently organized a workshop in New Delhi focusing on the implementation of Insurance Surety Bonds (ISB) for NHAI contracts. The event aimed to review the progress of ISB implementation and encourage wider adoption among stakeholders. Key speakers at the workshop included Shri Rajendra Kumar, Member (Finance) of NHAI, Shri A. K. Singh, CGM (Finance) NHAI, Shri N. B. Sathe, Advisor NHAI, and Smt. Mandakini Balodhi, Director at the Department of Financial Services.

The workshop was attended by representatives from various central government ministries and departments, insurance companies, the Highway Operators Association of India (HOAI), and the National Highways Builders Federation (NHBF). This gathering marks a significant effort by the NHAI to promote the use of ISBs as a viable alternative to traditional bank guarantees for government procurements and contract securities.

To date, NHAI has received 164 Insurance Surety Bonds, including 20 for Performance Security and 144 for bid securities. In total, around 700 Insurance Surety Bonds valued at approximately Rs. 3,000 crores have been issued by various insurance companies, indicating a growing acceptance of this financial instrument.

Insurance Surety Bonds provide a financial guarantee from insurance companies that contractors will fulfill their obligations as per the contract terms. The Ministry of Finance has recognized the potential of ISBs, placing them on par with bank guarantees for all government procurements.

During the workshop, panelists discussed the potential of ISBs to significantly enhance infrastructure development in India. They also addressed various challenges in adopting these bonds more widely and deliberated on measures to expedite their acceptance in the awarding of NHAI contracts. This initiative is part of NHAI’s broader strategy to strengthen the financial mechanisms supporting India’s infrastructure sector.