Govt considers giving financial creditor status to insurers issuing surety bond during resolution

Print 24-Sep-2023 , 09:08:17 pm | By CASANSAAR

Govt considers giving financial creditor status to insurers issuing surety bond during resolution

To make surety bond business more attractive, the government is looking at making relevant changes in the Insolvency and Bankruptcy Code (IBC) to consider insurers as financial creditor in case of default of infra projects.

The surety bond issued by a general insurance company is a three-party contract by which one party (the surety) guarantees the performance or obligations of a second party (the principal) to a third party (the obligee).

The surety is a company that provides the financial guarantee to the obligee (usually a government entity) that the principal (business owner) will fulfil their obligations.

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