Union road transport minister Nitin Gadkari on Wednesday said highway contractors can now convert their existing bank guarantees (BGs) into surety bond insurance products with a retrospective effect. He said the finance ministry has approved the proposal of his ministry, which will bring relief to private players.
The minister said he asked the highways secretary to take up the issue with the finance secretary and allow a provision for all BGs with the NHAI, NHIDCL and highway ministry to be retrospectively converted if the contractor wants. “Our secretary spoke to the finance secretary, who has given his approval. So, whatever bank guarantees are there, if they (contractors) want, they can convert them into insurance surety bonds,” Gadkari said.
Insurance companies can provide surety bonds in place of BGs on behalf of the contractor to an entity, such as, NHAI or other such organisations, which is bidding out projects. Gadkari told that contractors can go for surety bonds for projects taken up by state governments and even municipal bodies.