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Below is Perspective on IRDAI (Surety Insurance Contracts) Guidelines, 2021 by Mr. Vikash Khandelwal, CEO, Eqaro Guarantees

IRDAI has issued draft guidelines to offer Surety Solutions in India. The guidelines once approved and implemented promises to address the high funding requirement for construction, infra companies. Surety Bonds is an efficient way of bidding/developing huge infra projects. The guideline permits insurers and surety solution companies to work along with other financial institutions to share risk, technical expertise and take part in large underwritings. A new segment of the business will need such handholding by the government. The shared database of activities will also help mitigate any systemic risk to businesses.

Eqaro Guarantees have a well-defined, board-approved underwriting philosophy in place along with adequate underwriting competence and skills, risk management as per the prescribed guidelines. A robust surety solutions ecosystem is the need of the hour for India. The $5 trillion GDP target of India will only be possible if we build our infra projects at a record pace. Surety Solutions will enable efficient use of working capital and obviate the need for collateralization of bank guarantees thus releasing huge amounts of liquidity back into the system without compromising on the mitigation of risks. Surety guarantees can help in the faster and more efficient execution of projects which is the need of the hour.

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