Road,Transport and Highways Minister Nitin Gadkari said that changes will be made to the surety bond offering to make it more lucrative as no contractor is buying it because of the strict conditions imposed by insurance regulator ‘Irdai’. The product, from the stable of Bajaj Allianz General Insurance, has been developed in response to a demand identified by the industry and the government. In December 2022, Gadkari launched the country’s first-ever surety bond insurance product, with an aim to reduce the dependence on infra developers of bank guarantees.
“Changes will be made to surety bond offering to make it more lucrative,” he added. The Surety Bond Insurance is a risk transfer tool for the principal and shields the principal from the losses that may arise in case the contractor fails to perform their contractual obligation.The product gives the principal a contract of guarantee that contractual terms and other business deals will be concluded in accordance with the mutually agreed terms.The changes are aimed at expanding the surety insurance market by increasing the availability of such products.