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Regulators Need To be Fast In Their Operations: Nitin Gadkari

Surety bonds do not need security over assets and it will eventually increase trust in the insurance industry

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Minister for Road Transport & Highways Nitin Gadkari on Monday said that the regulators should not take years to approve a small innovative scheme while taking cognizance of undue delay in clearance of Surety Bond Insurance product at the regulators' end.

The IRDAI (Insurance Regulatory And Development Authority) took three years to clear the product even after a lot of persuasion from the ministry, Gadkari mentioned.

On Monday, the Minister for Road Transport & Highways launched the country's first-ever surety bond insurance product for the infrastructure sector, which has been developed by Bajaj Allianz General Insurance.

Surety Bond Insurance will act as a security arrangement for infrastructure projects and will insulate the contractor as well as the principal (contract awarding authority) from any loss.

IRDAI released final guidelines to ensure the orderly development of the surety insurance business in India in January this year.

FM Nirmala Sitharaman while announcing Union Budget 2022-23 stated that the use of surety bonds as an alternative for bank guarantee will be accepted.

Surety bonds do not need security over assets and eventually, it will further increase trust in the insurance industry.

Gadkari added, "With this new instrument of surety bonds, the availability of both liquidity and capacity will definitely be boosted; such products stand to strengthen the sector. We are confident that expanding our road network will lead to more prosperity, increased employment opportunities, and increased social connectivity."

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