Security deposit · 5–10% of each RA bill · NHAI, CPWD accepted

Security deposit bond — release the cash the obligee deducts every month.

On every running account bill, the obligee deducts 5–10% as security deposit against contract performance. Over a ₹100 cr contract, that's ₹5–10 cr of working capital trapped indefinitely. An insurance security deposit bond covers the same obligation and releases the cash to you. No FD lien. No bank guarantee. No collateral.

Get a security deposit bond quote → All BG replacements
Premium
0.55–1.10% p.a.
Bond capacity
Up to ₹200 cr
Quote SLA
4 working hours
— 01 — DEFINITION

What a security deposit bond does.

A three-party contract — between you, the obligee, and an insurance company — securing the obligee's right to recover performance shortfalls against the security deposit.

The security deposit problem

Indian government tenders typically deduct 5–10% of every running account bill as security deposit, held by the obligee until contract completion and through the defect liability period. For an active contractor running 5–10 simultaneous projects, this can mean tens of crores trapped in obligees' accounts at any given time.

What the bond does

The security deposit bond guarantees the same obligation — the insurer pays the obligee on first demand if a performance shortfall is identified within the bond tenure. The obligee, in return, releases the cash deductions to the contractor. Cash returns to your operations. Performance cover stays in place.

— 02 — COMPARISON

Security deposit bond vs cash deduction vs SD BG.

Three ways the obligee holds security against your performance. Only one returns your cash without consuming bank limits.

Dimension
Cash deducted / SD BG
SD surety bond
Working capital impact
5–10% of contract trapped, OR FD margin against BG
Cash released to operations
Bank credit limit
CC/OD limit reduced (if BG)
Untouched
Collateral
100% cash deducted or 15–25% FD margin
None for standard cases
Annual cost
Opportunity cost on locked cash, or 1.00–1.50% commission + margin cost
0.55%–1.10% premium only
Performance coverage
Same
Same
Obligee acceptance
Yes
Yes — per tender clause
— 03 — ACCEPTANCE

Obligees that accept security deposit bonds.

Confirmed per tender. The following bodies have explicit clauses or active precedent for insurance security deposit bonds.

✓NHAI
✓MoRTH
✓CPWD
✓Indian Railways
✓NHPC
✓NTPC
✓State PWDs
✓Metro corps
✓Port trusts
✓GeM
✓Municipalities
✓Smart City SPVs
— 04 — COST

Premium economics.

Indicative bands. Final premium depends on tenure, contract risk and contractor grade.

0.55%
Lower band — strong contractor, short tenure
0.80%
Mid band — typical NHAI/CPWD case
1.10%
Upper band — longer DLP / first-time file
— 05 — PROCESS

How we place your security deposit bond.

One file. 15 insurers see it simultaneously. They compete on rate.

Tell us the contract

Obligee, contract value, security deposit rate, deductions to date, contract status, defect liability period.

One file built

Your KYC, financials, work-order list and obligee bond format — standardised into one underwriting file.

Panel sees it

Routed to all 15 surety insurers simultaneously. They quote within 24–48h. We surface them on one sheet.

Bond bound

You pick. We bind. E-stamped bond delivered to your file. Originals couriered within 48h.

— 06 — DOCUMENTS

What we'll need from you.

The platform pre-fills 80% of the file from public sources. The rest is on you.

  • Company KYC · PAN, GST, MOA/AOA or partnership deed
  • Audited financials · last 2 years
  • Provisional financials · current year
  • Work order / contract · for the project the SD bond covers
  • Running account bills · latest certified, with SD deduction shown
  • SD statement · cumulative deduction to date
  • Obligee bond format · sample SD bond wording
  • Work-order list · last 3 years
— 07 — FAQs

Security deposit bond questions.

Six common questions. Same answers feed the FAQPage schema for Google rich snippets.

What is a security deposit bond?
A security deposit bond is an insurance surety bond that replaces the security deposit Indian government obligees deduct from each running account bill. It guarantees the same obligation for the obligee while releasing the cash deposit to the contractor's working capital.
How does security deposit differ from retention money?
Security deposit is typically a fixed percentage (5–10%) deducted from each running account bill as security against contract performance. Retention money is held back specifically against the defect liability period. Some tenders combine both; others use one or the other. A surety bond can replace either.
Is a security deposit bond accepted by Indian government obligees?
Yes. NHAI, CPWD, MoRTH, Indian Railways, GeM, central PSUs and most state PWDs accept insurance surety bonds in lieu of security deposit. The 2023 amendment to the General Financial Rules formalised acceptance for central procurement.
How much does a security deposit bond cost?
Premium is typically 0.55% to 1.10% of bond face value per year. Tenure usually matches the contract period plus defect liability. Final premium depends on contract risk, contractor grade and bond tenure.
When can I apply for a security deposit bond?
Apply at contract award, before the first running account bill is certified. You can also apply later in the contract to release accumulated security deposit deductions.
What documents are required?
Company KYC, last 2 years' audited financials, current year provisional, the contract or work order, latest running account bill (if applicable), the obligee security deposit bond format, and details of deductions already taken if applying mid-contract.

Release your security deposit. Keep your performance cover.

Tell us the contract. Four working hours later you have an indicative rate band and panel availability for your security deposit bond.

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