Insurance Surety Bond

Insurance Surety Bond mind map
  Context
    National Highways Authority of India (NHAI)
      Innovations
        Accepting Insurance Surety Bond
        In place of Bank Guarantee
      For
        Toll Operate Transfer (TOT)
      Significance
        First use in road infrastructure sector
      Aims
        Boost liquidity
        Encourage private participation
        In highway development
        Promote 'Ease of Doing Business'
      Partnership
        With insurance companies
      Role
        Serve as financial guarantee
      Traction
        Over 40 bonds issued
        For various NHAI contracts
      Potential
        For wider adoption
      Source: PIB
    Ministry of Finance, Government of India
      Recognition
        e-BGs and Insurance Surety Bonds
        At par with Bank Guarantees
      Role
        In government procurements
  About Surety Bonds
    Nature
      Legally binding contract
      Unique type of insurance
    Parties
      Three-party agreement
    Guarantee
      Compliance
      Payment
      Performance of an act
    Promise
      To be liable for
        Debt
        Default
        Failure of another
    Participants
      Principal
        Debtor
      Surety
        Third person
          Responsible for payment
          If principal fails
    Usage
      As assurance
        Issuer will pay debts
      Example
        Substitute for bank guarantees
        In government procurement

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