Nitin Gadkari launches India's first-ever surety bond from Bajaj Allianz

Tags: Economy/Finance

Union Minister for Road, Transport and Highways Nitin Gadkari launched India’s first ever surety bond insurance product from the Bajaj Allianz General Insurance on 19 December 2022. It is expected to reduce the need for bank guarantee for the infrastructure developers. 

What is Surety Bond Insurance?

The Surety Bond Insurance is a risk transfer tool for the principal (authority which has awarded the contract) and shields the principal from the losses that may arise in case the contractor fails to perform their contractual obligation.

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 thus freeing up significant funds for the contractor, which they can utilise for the growth of the business.

The insurance 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.

Bajaj Allianz General Insurance 

Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv Limited and Allianz SE (Germany). 

It commenced its operation in India in 2001.

Headquarters: Pune, Maharashtra

Managing Director and Chief Executive Officer: Tapan Singhel 

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