NHAI to now accept electronic bank guarantees

The National Highways Authority of India (NHAI) has started accepting Electronic Bank Guarantees (E-BGs) and has also digitalized all its existing Bank Guarantees. An official statement said this is being done to improve efficiency and transparency of internal processes and take forward the adoption of digital technology.

A Bank Guarantee (BG) is a commercial instrument used as a legal contract in which a bank acts as a guarantor and undertakes an obligation to pay the beneficiary a certain amount of money if the debtor from the original contract defaults on contractual obligations.

NHAI is said to be utilizing the E-BG services of National e-Governance Services Limited (NeSL), which facilitates reduction in physical paper movement, elimination of physical storage needs and easy access for Bank Guarantee life cycle events like invocation, renewal and closure. Few E-BGs have already been issued by the Banks in favour of NHAI.


Secretary, Ministry of Road Transport and Highways and Chairperson, NHAI, Alka Upadhyaya said, "We encourage the concessionaires to adopt E-BGs. This is in line with the spirit of Digital India."

NHAI requires bank guarantees for faithful fulfillment of contractual obligations. "The physical form of the BG presents challenges like time consuming verification process and possibility of frauds," the statement added.