With receipt of appointed date, significant ramp up in execution likely in infra sector
India’s first ever surety bond insurance product is going to be launched on December 19 by MoRTH. The product can be used as a substitute for bank guarantees in government procurement tenders
It is estimated that banks seek close to 30-50% of cash money margin (from smaller construction companies), which is then stuck in bank guarantees. The premium charged for this insurance bond is expected to be lower to make the product affordable. Thus, the surety bond insurance is likely to boost the liquidity in infrastructure sector by freeing the working capital of small contractors stuck in bank guarantees
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