Working capital crisis: Can surety bonds assure MSMEs freedom from hassle of expensive bank guarantees

Sujjain Talwar, Co-Founding Partner, Economic Laws Practice (ELP) has been quoted by Financial Express Online in their article titled ‘Working capital crisis: Can surety bonds assure MSMEs freedom from the hassle of expensive bank guarantees’.

Sujjain is of the opinion that the replacement of bank guarantees with surety bonds might require a change in government procurement contracts, particularly for small PSUs. He says, “The more sophisticated PSUs like ONGC will probably not need a nudge. Perhaps, the Credit Guarantee Scheme could be extended for the issuance of surety bonds for MSMEs. Insurance companies will certainly be amenable to issue such bonds but may surely be as selective as banks”.

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