New Delhi: Speaking at the NHAI Workshop on Implementation of e-BG and Insurance Surety Bonds for Contracts in New Delhi, Union Minister for Road Transport and Highways, Nitin Gadkari encouraged stakeholders to expedite adoption of e-BG and Insurance Surety Bonds for National Highway infrastructure development, said a statement by the Ministry of Road, Transport and Highways on Wednesday.
Gadkari also emphasised the significance of coordination, cooperation, and communication among all stakeholders in the PM Gati Shakti Master plan for National Highway development. He stressed the need for time-bound, transparent, and result-oriented decision-making processes, said the statement by the Ministry of Road, Transport and Highways on Wednesday.
The objective of the workshop was to promote the benefits of e-BGs and Insurance Surety Bonds among various stakeholders and encourage their widespread adoption. The implementation of these instruments will enhance transparency and efficiency in processes related to National Highway development. The workshop was attended by Minister of State General Dr VK Singh (Retd), Anurag Jain, Secretary, MoRTH, Santosh Kumar Yadav, Chairman, NHAI, senior officials from MoRTH, NeSL, IRDAI, NHAI, NHIDCL, industry experts, and representatives from banks and insurance companies, the statement added.
During the workshop, presentations were made by NeSL, banks, and insurance companies, providing insights into the e-BG workflow, regulatory framework of Surety Bonds, and perspectives for vendors and beneficiaries.
NHAI has already begun accepting Bid Security and Performance Security in the form of e-BGs. However, currently, only 13 banks in 19 states and Union Territories offer the facility to issue e-BGs. Despite this limitation, various banks across different states have issued approximately 202 e-BGs for NHAI contracts through the NeSL platform.
NHAI is also exploring the use of Insurance Surety Bonds as an additional mode of submitting Bid Security and/or Performance Security Deposit. These bonds, when implemented, will offer cost-effective and secure alternatives for NHAI projects, with insurance companies acting as 'Surety' to ensure the contractor fulfills their obligations.
A Bank Guarantee (BG) serves as a financial instrument in which a bank acts as a guarantor and commits to paying a specified amount to the beneficiary if the original debtor fails to fulfill contractual obligations. Similarly, Insurance Surety Bonds provide a financial guarantee by insurance companies, ensuring the contractor's compliance with agreed terms. The Ministry of Finance has made e-BGs and Insurance Surety Bonds at par for all government procurements.
As India strives to become a USD 5 Trillion economy, the implementation of instruments such as e-BGs and Insurance Surety Bonds will enhance liquidity availability and capacity, supporting the development of National Highway infrastructure and contributing to the economic growth of the country.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)