The Indian State bank of India’s non-life insurance arm SBI General Insurance has recently launched an insurance product named as ‘Surety Bond Bima’ (Conditional and Unconditional). This product was introduced on Tuesday and its application is strictly geared towards infrastructure projects as it offers an important security compromis that is advantageous to both the contractor and principal (contracting authority).
Understanding Surety Bond Insurance
The Surety Bond Bima is intended to protect against contractual obligations and conditions of contractors at various project development phases or during bidding and project implementation. This product is crucial for the major programs to guarantee that infrastructure projects go as planned without being affected financially by contractors who fail to deliver as expected.
Some of the characteristics of surety bond bima include the following The main characteristics of surety bond bima include the following:
SBI General Insurance has launched a new product that covers a wide category of bonds to meet various requirements of the contractors involved in operations in today’s uncertain world. The range of bonds under this product includes: The range of bonds under this product includes:
- Bid Bonds: Make it your responsibility to follow the bidding process by the contractor.
- Advance Payment Bonds: Guarantee the protection of the advance payments particularly to the contractors.
- Performance Bonds: Make sure that the contractor delivers his/her/its services as planned and as agreed.
- Retention Money Bonds: The funds that are retained by the project owner should be safeguarded until the end of the project is achieved.
Conditional vs. Unconditional Bonds
- The Surety Bond Bima offers two variants: debt securities and temporary and permanent loans
- Conditional Bonds: These bonds make payment of a fixed amount, to the beneficiary once certain predetermined terms are fulfilled.
- Unconditional Bonds: These are more favorable as they offer more freedom to the beneficiary to obtain the money with few requirements.
Supporting Government's Infrastructure Vision
This product was designed to meet the government’s goal of improving the physical structures of the infrastructures country wide. Whole-time Director of SBI General Insurance Anand Pejawar underscored that the Surety Bond Bima gives project owners confidence that contractors will complete projects as per agreements hence contributing to nations infrastructure objectives.
Why ‘Surety Bond Bima’ as the New Innovation Is Revolutionary for Infrastructure Project
I believe that the new product offering, the Surety Bond Bima, will advance the infrastructure sector by a large leap. Not only does it give protection to the contractor and project owners but at the same time it reiterates the overarching governmental plans of fast-tracked infrastructure development in India. Because of its ability to provide coverage and bond options that range from simple and basic to complex and sophisticated, this product is poised to become the mainstay of contractors dealing with the structures of the infrastructure industry.
