The finance ministry has agreed to allow highway developers to replace their existing bank guarantees with insurance surety bonds, road transport and highways minister Nitin Gadkari said Wednesday. This would help unlock capital and speed up projects.
Over 4,000 bank guarantees worth `2 trillion are lying with the NHAI itself. Many developers have been seeking the option to convert the guarantees.
Insurance Surety Bonds (ISB), allowed by Insurance Regulatory and Development Authority in April 2022, has been brought as a replacement of bank guarantees. Five insurance companies have already launched ISB products; however, the market for these bonds is yet to take off.
