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Union Minister for Road Transport and Highways Shri Nitin Gadkari on 19 December launched one of India’s first-ever Surety Bond Insurance product from Bajaj Allianz.
Commenting on the product launch, Shri Gadkari said “India is well on its path to becoming a $ 5 Trillion economy and achieving the dream of our honourable Prime Minister, Shri Narendra Modi Ji; insurance will play an important role in this growth. To realize Modi Ji’s dream, it is important that infrastructure projects are executed at a faster speed; infrastructure, and notably roads, are vital to the economic and social growth of our country. With this new instrument of Surety Bonds, the availability of both liquidity and capacity will definitely be boosted; such products stand to strengthen the sector.”
–Surety Bond Insurance will act as a security arrangement for infrastructure projects.
–The product will cater to the requirements of a diversified group of contractors.
–The Surety Bond Insurance is a risk transfer tool for the Principal and 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 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.
–Unlike a bank guarantee, the Surety Bond Insurance does not require large collateral from the contractor.
–The product will also help in reducing the contractors’ debts to a large extent thus addressing their financial worries.
–The product will facilitate the growth of upcoming infrastructure projects in the country.