How IRDAI-regulated Surety Bonds allow contractors to bid for mega infrastructure and highway tenders without locking up 100% cash margins in bank fixed deposits.
For decades, contractors bidding on NHAI, Railways, and state government tenders had to lock significant working capital as fixed deposit collateral to procure Bank Guarantees (BGs). Surety Bonds provide an identical tripartite guarantee underwritten by insurance companies without tying up capital margins.
Priya Sharma
Financial Research & Advisory Specialist at Finfly India.