Insurance surety bonds data gaps under regulatory lens

New Delhi: Financial sector regulators, including the Reserve Bank of India and the Insurance Regulatory and Development Authority of India (IRDAI), are expected to address gaps in the reporting of insurance surety bonds and private credit exposures as lenders flag the lack of such instruments from credit information systems as a major blind spot, said people aware of the discussions.

A senior government official told ET that the issue may be deliberated at the level of the Financial Stability and Development Council (FSDC), an apex inter-regulatory body chaired by the finance minister, which coordinates among key financial sector regulators to safeguard systemic stability and address emerging risks. Key members of the FSDC include the Securities and Exchange Board of India and Pension Fund Regulatory and Development Authority.

Insurance surety bonds are instruments in which insurers act as sureties, guaranteeing that a contractor will fulfil its obligations under the agreed terms.

"It has been flagged that insurance surety bonds are currently not being captured in the credit information reports of credit information companies (CICs), resulting in gaps in lenders' assessment of borrower exposures," the official said, adding some lenders have also flagged the growing prevalence of private credit, including exposures through alternative investment funds (AIFs), which aren't currently reported to the Central Repository of Information on Large Credits (CRILC), limiting system wide visibility.


Under existing regulations, IRDAI (Surety Insurance Contract) Guidelines 2022, promote and regulate development of surety insurance business in India.

A bank executive said insurance surety bonds should be factored into working capital assessments to better reflect contingent liabilities arising from such instruments. "We have been pressing for disclosure of such instruments in credit appraisal processes as their absence from reporting frameworks could lead to an incomplete view of leverage."

Insurance surety bonds issued for infrastructure projects alone have crossed ₹10,000 crore, with around ₹10,369 crore of issuances reported for NHAI contracts as of July 2025. As per industry estimates, volumes will have reached around ₹60,000 crore by 2025-end.

Information utility National E-Governance Services Ltd (NeSL) is also working on electronic insurance surety bonds (e-ISB), pitching it as an alternative to all forms of performance bid guarantees.