**Policy Summary: Insurance Surety Bonds for NHAI Contracts Reach Rs. 10,000 Crore Milestone**
As of September 11, 2025, Insurance Surety Bonds (ISBs) issued by insurance companies for National Highways Authority of India (NHAI) contracts have surpassed Rs. 10,000 crore. By July 2025, 12 insurance companies had issued approximately 1,600 ISBs as Bid Security and 207 ISBs as Performance Security, totaling around Rs. 10,369 crores for NHAI contracts. The NHAI has actively promoted the use of ISBs as an alternative to traditional Bank Guarantees for submitting Bid and Performance Security Deposits. To further encourage the adoption of ISBs and Electronic Bank Guarantees (eBGs), NHAI organized a workshop in New Delhi. The workshop included key stakeholders such as Shri N.R.V.V.M.K Rajendra Kumar, Member Finance, NHAI; Shri Nilesh Sathe, Former Member, IRDA; Senior NHAI Officials, industry experts, and representatives from insurance and finance companies. ISBs function as financial guarantees provided by insurance companies, ensuring contractors fulfill their contractual obligations. The Ministry of Finance has aligned eBGs and ISBs with Bank Guarantees for all government procurements. ISBs offer a cost-effective security solution for NHAI projects. With India's construction market projected to become the third largest globally, the demand for Bank Guarantees in the Indian infrastructure sector is expected to increase by 6-8% annually. Surety Bonds serve as a practical alternative to Bank Guarantees, providing cost-effective relief to the Infrastructure Sector.
Key Entities Referenced
Ministry of Road Transport Highways: A ministry of the Government of India responsible for the development and maintenance of the national highways network.
NHAI: National Highways Authority of India, an autonomous agency of the Government of India responsible for managing the national highways network.
Insurance Surety Bonds: Financial instruments issued by insurance companies that guarantee the fulfillment of contractual obligations.
New Delhi: The location of a workshop organized by NHAI to promote Insurance Surety Bonds and Electronic Bank Guarantees.
Shri N.R.V.V.M.K Rajendra Kumar: Member Finance, NHAI who chaired a workshop on Insurance Surety Bonds and Electronic Bank Guarantees.
Shri Nilesh Sathe: Former Member, IRDA (Insurance Regulatory and Development Authority), participated in the workshop.
Electronic Bank Guarantee: An electronic form of a bank guarantee, used as an alternative to traditional bank guarantees.
Ministry of Finance: A ministry of the Government of India that has made eBG and Insurance Surety Bonds at par with BGs for all Government procurements.
Ministry of Road Transport & Highways
Insurance Surety Bonds for NHAI Contracts Crosses
Rs. 10,000 Crore Landmark
Posted On: 11 SEP 2025 3:59PM by PIB Delhi
Achieving a major milestone, Insurance Surety Bonds (ISB) issued by the insurance companies for NHAI
contracts has crossed Rs. 10,000 crore landmark. Till July 2025, 12 insurance companies have issued around
1,600 ISBs as ‘Bid Security’ and 207 ISBs as ‘Performance Security’ valued at around Rs. 10,369 crores for
NHAI contracts. NHAI has been encouraging the use of Insurance Surety Bonds as an additional mode of
submitting Bid Security and/or Performance Security Deposit.
In a bid to further promote wider adoption of Insurance Surety Bonds (ISB) and Electronic Bank Guarantee
(eBG), a workshop was organized by NHAI in New Delhi. The session was chaired by Shri N.R.V.V.M.K
Rajendra Kumar, Member (Finance), NHAI; Shri Nilesh Sathe, Former Member, IRDA; Senior NHAI
Officials, industry experts and representatives of various insurance and finance companies participated in the
workshop.
Insurance Surety Bonds are instruments where insurance companies act as ‘Surety’ and provide the financial
guarantee that the contractor will fulfil its obligation as per the agreed terms. The Ministry of Finance,
Government of India 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 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 percent 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.
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SR/GDH/PN/HK
(Release ID: 2165663)