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Surety Bonds provide a smart, cost-effective alternative to Bank Guarantees, reducing collateral requirements, freeing up working capital and enhancing liquidity. Whether you are a PSU, corporate leader or MSME owner, this innovative solution empowers you to scale, de-risk operations and drive efficiency across your ecosystem.
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Collateral Free alternatives to Collateral Backed Bank Guarantees.
Surety Bonds are a modern, cost-efficient alternative to traditional Bank Guarantees (BGs). Introduced in 2022 and regulated by IRDAI, they offer the same unconditional assurance as BGs— without the operational and financial burden.
All Your Surety Bonds Questions Answered
See which Government Beneficiaries are accepting SBs
Regulatory Documents and Advisory from Ministries for using Surety Bonds
Surety Bonds for Corporates : Article
Issued by leading Insurance Companies, Surety Bonds are BG equivalent guarantees. Beneficial cost-wise, effort-wise, hassle-wise!
Lower Costs:
Save 40-60% compared to BGs, making your guarantees cost-effective.
No Collateral Requirements:
Free up your working capital while ensuring MSMEs in your value chain can scale without financial strain.
Treasury-Friendly:
Surety Bonds are off-balance-sheet items, preserving clean financials and reducing liabilities.
Hassle-free Experience:
Manage, issue, and renew bonds effortlessly on the axiTrust platform—eliminating paperwork and manual follow-ups.
No Change in Processes:
Adoption is seamless. Surety Bonds work just like BGs, ensuring no additional training or process changes for your teams.
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Understanding the economics of SBs is tied to uncovering the REAL cost of BGs
Even with With Bank lines BGs still cost upwards of 5% of Guarantee needed.
The above representations assume your locked funds would yield 20% returns at the end of the year. They also assume that creating a BG requires 20% margin money - and this is stuck in BGs.
Without any bank lines and with FD used as collaterals, BGs cost as high as 12-14%
The above representations assume your locked funds would yield 20% returns at the end of the year. They also assume that creating a BG requires 100% FD investments— which isn't earning you as much!
Of course some of the above assumptions change basis your business. What you can do note that the cost of BGs needs to include the opportunity cost - for it to be comparable to Surety Bonds. Because in the latter, there are no collaterals to provide!
When you compare the Surety Bond Premium with the above actual BG costs, businesses - especially the MSMEs in your ecosystem - can unlock substantial cost and efficiency savings - as much as 40%-60% over BG costs!
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Whether you issue guarantees or accept guarantees SBs can help corporates across their Business needs
When you are accepting guarantees from other businesses as a Beneficiary:
Accept Surety Bonds from MSMEs, distributors/customers or vendors to reduce their costs and increase liquidity within your supply chain. Secure more bids, performance and advances you extend, without increased risks.
When you are issuing guarantees to Government or other businesses as a Principal:
Provide Surety Bonds to secure government tenders (bid, performance, retention), vendor relationships or customer transactions while optimising your cash flow.
Surety Bonds also extend to other use cases where guarantees are needed : Warehousing Guarantees, Custom Guarantees, Rental Guarantees etc.