The Indian finance ministry has given the National Highways Authority of India (NHAI) and National Highways & Infrastructure Development Corporation permission to convert bank guarantees into insurance surety bonds, in an effort to encourage contractors to purchase the latter product. NHAI released the country's first-ever surety bond insurance solution in December 2018. The product acts as a risk transfer tool for the principal, protecting them against losses that may arise if the contractor fails to fulfil their contractual obligations. Unlike with bank guarantees, a large collateral backing is not required, freeing up funds for contractors.