Surety bonds by state — central vs state acceptance in India.

The 2022 amendment to the General Financial Rules (GFR), together with IRDAI's Surety Insurance Guidelines, created the legal basis for insurance surety bonds to replace bank guarantees on government procurement in India. That amendment governs central government procurement directly — which is why NHAI, CPWD, MoRTH, Indian Railways and GeM tenders accept surety bonds today, wherever in India the project sits.

State governments run their own procurement rules. Most states model their financial rules on the central GFR, but each state (and often each department within a state) has to separately adopt, notify, or update its own tender templates and finance-department manuals before a state PWD tender officer is authorised to accept a surety bond in place of a bank guarantee. This adoption has been happening steadily since 2022, but not uniformly — some states and departments moved quickly, others are still working from templates that only mention bank guarantees.

This is the single most common point of confusion for contractors: a bond that a NHAI tender accepts without question can still get a puzzled response from a state PWD officer whose office hasn't updated its own format yet — not because surety bonds are disallowed, but because the local process hasn't caught up.

If your obligee is one of these, the surety bond format is standardised and the state you're executing in doesn't change acceptance. See the full obligee-by-obligee acceptance guide for tender-format specifics on each.

Rather than relying on a general "does my state accept surety bonds" answer that can go stale as departments update their rules, check these three things for the specific tender in front of you:

• Read the bid/performance security clause in the tender document. If it names "insurance surety bond" or "ISB" as an acceptable instrument alongside bank guarantee, you're clear.
• Check for a GFR or state-finance-department reference. Tenders that have been updated post-2022 often cite the GFR amendment directly, or a state government order adopting equivalent rules.
• If the format only says "bank guarantee," ask before you bid. Write to the tendering authority requesting confirmation that a surety bond will be accepted, citing the GFR 2022 amendment and IRDAI guidelines. Get it in writing — a verbal assurance from a desk officer isn't sufficient if a different reviewer later queries the submission.

Rakshati's underwriting team checks this as part of every file — if there's any doubt about a specific obligee's acceptance for your tender, we verify it before the bond is issued, not after.