Surety bonds vs bank guarantees: A financial shift in project risk-sharing

The surety bonds market in India has the potential to generate billions of dollars in premiums over the coming years

A few years ago, there was a scare in India’s banking sector because of a surge in non-performing assets (NPAs), with the combined figure for banks rising from 2.3 per cent in 2011 to 11.2 by 2018. The result was a grave concern about the health of the sector. And it bore quick lessons all around. 

One of those lessons led to the creation of the bankruptcy mechanism and the Insolvency and Bankruptcy Board of India in October 2016. The other was the rollout of the surety bonds by the insurance regulator, the Insurance Regulatory and Development Authority of India