NHAI starts accepting electronic bank guarantees

To improve efficiency and transparency of internal processes and take forward the adoption of digital technology, National Highways Authority of India (NHAI) has started accepting electronic bank guarantees (E-BGs) and has also digitalized all its existing bank guarantees, the Ministry of Road Transport & Highways said in a statement.

“NHAI is 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,” the ministry said.

“Keeping in view the advantages of E-BGs, we encourage the concessionaires to adopt E-BGs. This is in line with the spirit of ‘Digital India’. E-BGs promote transparency, brings in several efficiencies and provide ease of doing business to our stakeholders,” said Alka Upadhyaya, Secretary, Ministry of Road Transport and Highways & Chairperson, NHAI said.

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 specified in the guarantee if the debtor from the original contract does not fulfill his contractual obligations.

The ministry said that organisations like NHAI require BG, generally for the faithful fulfillment of contractual obligations.

“The physical form of the BG presents challenges like a time-consuming verification process and the possibility of fraud. However, the NHAI has been dealing with BG-related issues and challenges effectively and efficiently through its internal processing mechanism,” the statement said.