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NHAI proposes insurance cover for road projects

By IndianMandarins- 29 Jan 2020
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The NHAI has proposed insurance cover for road projects that could help bring in credible project developers and mitigate construction period risks. It is trying that insurance companies to give a surety.

This has been proposed to the IRDAI to come up with an instrument. An official said that this mechanism has been proposed since banks are facing difficulties in furnishing bank guarantees.

NHAI is working on the concept of surety bonds, commonplace in several countries, including the US, UK, Australia and Canada. World over,there is a concept of surety bonds. The government is trying to bring that concept to India.

A surety bond is a three-party agreement that legally binds together a principal who needs the bond, an obligee who requires the bond, and a surety company that sells the bond. Surety bonds provide financial guarantee that contracts will be completed according to pre-defined and mutual terms.

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