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Insurance Surety Bonds for NHAI Cross Rs 10 Billion

2025-09-16

Insurance Surety Bonds (ISBs) issued by insurance companies for National Highways Authority of India (NHAI) contracts have surpassed the Rs 10 billion mark. As of July 2025, twelve insurers have issued around 1,600 ISBs as ‘Bid Security’ and 207 as ‘Performance Security’, valued at approximately Rs 10.37 billion. NHAI has actively promoted ISBs as an alternative mode of submitting Bid Security or Performance Security deposits.

To encourage broader adoption of Insurance Surety Bonds and Electronic Bank Guarantees (eBG), NHAI organised a workshop in New Delhi. The session was chaired by Shri N.R.V.V.M.K. Rajendra Kumar, Member (Finance), NHAI, with participation from Shri Nilesh Sathe, former IRDA Member, senior NHAI officials, industry experts, and representatives from insurance and finance companies.

ISBs function as instruments where insurers act as ‘Surety’, providing a financial guarantee that contractors will fulfil obligations under contract terms. The Ministry of Finance has recognised eBGs and ISBs on par with traditional Bank Guarantees for all government procurements. These bonds are cost-effective while providing adequate security for NHAI projects.

With India poised to become the world’s third-largest construction market, the demand for Bank Guarantees in the infrastructure sector is projected to grow 6–8 per cent annually. Insurance Surety Bonds provide a viable, cost-efficient alternative, offering substantial financial relief for the sector.

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