NHAI conducts workshop on implementation of insurance bail bonds in National Highway Agreements
The NHAI had organised a workshop in New Delhi on the implementation of Insurance Assured Bonds (ISBs) for contracts. The objective of the workshop was to review the progress made in the implementation of Insurance Security Bonds and encourage participation of stakeholders to widely adopt this tool. Rajendra Kumar, Member (Finance), NHAI, addressed the workshop. Shri A.K., CGM (Finance), NHAI. Advisor, NHAI, Shri N.B. and Ms. Mandakini Balodi, Director, Department of Financial Services. The workshop was attended by representatives of various ministries and departments of the Central Government, insurance companies, Highway Operators Association of India (HOAI) and National HighwayBuilders Federation (NHBF).
The Ministry of Finance, Government of India has made insurance bonds at par with bank guarantees for all government purchases and NHAI is requesting insurance companies and contractors to use insurance bail bonds as an additional means of submission.
According to the information given in the workshop, so far about 700 insurance bail bonds worth about Rs 3,000 crore have been issued by various insurance companies. Acknowledging the potential of ISB, the panelists at the workshop suggested wide adoption of financial instruments for awarding NHAI contracts. The workshop highlighted various challenges and discussed what possible steps can be taken to speed up the machinery.
Insurance bail bonds are a financial instrument, where insurance companies act as ‘bells’ and provide financial guarantees that the contractor will fulfill its obligations under the agreed terms. The widespread adoption of such tools will help in strengthening the infrastructure development in the country.
