Minister for Road Transport and Highways Nitin Gadkari announced on Thursday that the country's first-ever Surety Bond insurance product would be launched on December 19. Gadkari announced this while addressing the CII's Global Economic Summit, adding that the product will be of great help to the contractors.
The Surety Bond insurance will help in infusing liquidity in the infrastructure sector as it will free up the working capital belonging to contractors, which is stuck in bank guarantees, the minister said. This fund could be used in accentuating their (contractors') businesses, Gadkari said.
According to estimates, banks seek up to 50 per cent of cash money margin from small construction entities. This ends up as bank guarantees. Sources said the premium to be charged for this insurance bond is expected to make it a reasonable product.
Gadkari also said that the time is now ripe for the Indian economy to ramp up infrastructure facilities and create employment opportunities as a solution to resolve recessionary trends.