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The National Highways Authority of India (NHAI) announced that Insurance Surety Bonds (ISBs) have crossed INR 10,000 crore in use since their launch in 2022. Introduced as an alternative to bank guarantees, ISBs let contractors pay premiums to insurers instead of providing collateral, easing financial pressure. By July 2025, around 1,600 bid security bonds and 207 performance bonds worth INR 10,369 crore had been issued. Early adoption included key Delhi-Mumbai Expressway packages. A workshop in New Delhi reviewed progress and encouraged wider use, with the Finance Ministry confirming ISBs and electronic bank guarantees will be treated on par with traditional guarantees.
The National Highways Authority of India (NHAI) has reported that the use of Insurance Surety Bonds (ISBs) for its contracts has crossed INR 10,000 crore since the product was introduced in 2022. The instrument was first announced in the Union Budget that year as a replacement option for traditional bank guarantees in government procurement. Advertisement
By July 2025, twelve insurance companies had issued close to 1,600 ISBs for bid security and 207 for performance security, amounting to a total of INR 10,369 crore in value.
The first set of NHAI contracts to use ISBs were awarded in 2022-23, including packages of the Delhi-Mumbai Expressway and other expressway projects in Uttar Pradesh and Madhya Pradesh. These early adoptions helped build confidence in the new system and demonstrated its viability for large-scale infrastructure works.
These bonds allow contractors to provide premiums to insurers instead of collateral, which is otherwise required in bank guarantees.
A workshop held in New Delhi reviewed the progress of ISBs and electronic Bank Guarantees (eBGs) in highway contracts. The session was chaired by N.R.V.V.M.K. Rajendra Kumar, Member (Finance), NHAI, and attended by senior government officials, industry representatives, and insurers. Discussions were focused on building confidence in the use of ISBs and promoting them across more projects.
The Ministry of Finance has already notified that ISBs and eBGs will be treated on par with bank guarantees across all government tenders. For contractors, this is expected to reduce financial burden and make it easier to participate in large infrastructure contracts.
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