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India’s first ever Surety Bond Insurance launched

December 21, 2022

India’s first ever Surety Bond Insurance launched
The country’s first ever ‘Surety Bond Insurance’ product developed by Bajaj Allianz General Insurance, a private general insurer, was launched by Nitin Gadkari, Union Minister of Road Transport & Highways, on Monday.

Surety Bond Insurance which will help replace bank guarantees is expected to optimise capital for contractors while giving a fillip to the country’s infrastructure sector.

This product launch is in line with the Government’s vision to up-scale the infrastructure development in the country.

In Budget 2022-23, Finance Minister Nirmala Sitharaman announced that Surety Bond Insurance would be allowed as a substitute for bank guarantees in case of government procurement and also for gold imports.

Surety Bond Insurance, which is mainly aimed at infrastructure development, is a risk transfer tool that shields the principal from the losses that may arise in case the contractor fails to perform their contractual obligation.

The product gives the principal a contract of guarantee that contractual terms and other business deals will be concluded in accordance with the mutually agreed terms. In case the contractor doesn’t fulfil the contractual terms, the principal can raise a claim on the Surety Bond and recover the losses they have incurred.

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