Surety bond insurance set to hit market

New Delhi: The Ministry of Road Transport and Highways (MoRTH) will launch India's first-ever surety bonds insurance product on December 19 to boost liquidity in the infrastructure sector, Union minister Nitin Gadkari said on Thursday.

Addressing an event organised by industry body CII, Gadkari said Indian highways infrastructure is developing at a rapid pace. "On December 19, our ministry is launching India's first-ever surety bond insurance product...that is going to give a good relief to the contractors," he said. Surety bonds are different from corporate bonds and financial guarantees.

While surety bonds refer to the performance or delivery obligation to complete the insured project, the corporate bonds refer to financial obligation to repay the debts or loans. "The surety bonds will help in boosting the liquidity in the infrastructure sector by freeing the contractors working capital stuck in bank guarantees.

"Contractors can utilise these funds for growth of their business," the road transport and highways minister said. Gadkari said he wants to launch a mass rapid transport system on electricity. "I want to launch 30 funicular railway system projects in Ladakh and Leh," he said.