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.
Volume of ISBs Issued
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 Encouraging Use of ISBs
NHAI has been encouraging the use of Insurance Surety Bonds as an additional mode of submitting bid security performance security deposit.
Role of Insurance Surety Bonds
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.
MoF Equates ISBs with Bank Guarantees
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.
Workshop to Promote ISBs and e-BGs
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.
Senior Officials Participate in Workshop
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.
Rising Demand for Bank Guarantees
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.
Expansion of Highway Network
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.
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Impact on GDP and Employment
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.
(Disclaimer: Except for the headline, this article has not been edited by FPJ's editorial team and is auto-generated from an agency feed.)
