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IRDAI caps value of surety insurance contracts at Rs 500 cr

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The Insurance Regulatory and Development Authority of India (IRDAI) has capped the quantum of surety insurance contracts for an insurer at 10 per cent gross premium written subject to a maximum of Rs 500 crore per year.

The IRDAI has also stipulated that the non-life insurers wanting to underwrite the surety insurance risks should have a solvency margin of 1.25.

The Authority on Monday issued the IRDAI (Surety Insurance Contracts) Guidelines 2022 laying down the norms for this line of business.

Non-life insurers are allowed to carry out this business from April 1 onwards.

“The norms will help regulate/develop Surety as a business in India which otherwise is an accepted norm in the western countries,” Vikash Khandelwal, CEO, Eqaro Guarantees said.

“However, it would have been ideal if the final norms had also provided for a specialist surety insurance company,” Khandelwal added.

The Mumbai-based Eqaro Guarantees is a surety solutions provider.

Presently IRDAI allows standalone health insurance companies.

According to Khandelwal, allowing the surety insurers to work alongside the banks and other financial institutions to share risk-related information and technical expertise will help foster a robust ecosystem and prevent contagion.

“The guidelines are also silent on the right of recourse available to a surety insurance company in the event of a default by the contractor. These are critical and may impede the creation of surety-related expertise and capacities and eventually deter insurers from writing this class of business,” he remarked.

There are three parties to this contract viz., Surety-the person who gives the guarantee; the person in respect of whose default the guarantee is given is called the Principal Debtor and Creditor- the person to whom the guarantee is given.

The other underwriting guidelines as per IRDAI are surety insurance contracts can be issued for infrastructure projects of government/private in all modes; the contract bonds may include Bid Bonds, Performance Bonds, Advance Payment Bonds and Retention Money; the insurers can also underwrite Customs or Tax Bonds and Court Bonds; limit of guarantee cannot exceed 30 per cent of the contract value; surety insurance can be issued for specific contracts alone; the insurer cannot issue any surety insurance contracts on behalf of its promoters/subsidiaries, groups, associates and related parties; the insurer shall not enter into alternate risk transfer mechanism; surety insurance contracts cannot cover financial guarantee; and surety insurance cannot be issued where the underlying assets/commitments are outside India.

Business

Weaker Republican showing could reshape US trade policy outlook: Expert

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A weaker-than-expected performance by the Republican Party in the US midterm elections could reignite debate over the future direction of American trade policy and influence ongoing trade negotiations with India, experts said on Wednesday.

According to Tanay Dalal, Senior Vice President (Business & Economic Research) at Axis Bank, changes in the composition of the US Congress are unlikely to significantly alter the institutional framework governing current trade negotiations. He noted that any attempt to restore Congress’s authority over trade policy would require a veto-proof majority, a scenario that remains unlikely.

Dalal added that the scope for aggressive trade actions could gradually diminish amid a divided government in the United States and growing political constraints on the administration.

However, uncertainty is expected to persist due to ongoing legal challenges to existing tariff measures.

For India, the situation remains complex, he said. Geopolitical developments, particularly the war in Ukraine and tensions in the Middle East, are likely to continue shaping US trade policy.

As a result, even if Washington adopts a less aggressive stance on tariffs, India may not necessarily benefit.

The country could still face targeted US trade restrictions in areas where strategic and geopolitical interests diverge.

Meanwhile, commodity markets witnessed significant volatility following the Democrats’ victories in both the House and Senate.

Crude oil prices declined, with benchmark Brent crude falling 1.19 per cent to $102.39 per barrel and WTI crude slipping 0.78 per cent to $95.31 per barrel at the time of writing.

In contrast, precious metals gained. On COMEX, gold rose 2.72 per cent to $4,047 per ounce, while silver advanced 4.22 per cent to $51.85 per ounce.

Meanwhile, in other development, Indian officials reacted cautiously to the US midterm election results, saying the outcome could ease some pressure arising from trade tensions but also introduces fresh uncertainty into an already delicate bilateral relationship.

The Democratic Party secured sweeping victories in both chambers of the US Congress, delivering a significant setback to President Donald Trump.

His administration’s tariff policies and confrontation with Iran have had significant implications for countries such as India, which relies on the US as its largest export market and sources a substantial portion of its crude oil requirements from the Middle East.

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ED raids 10 locations in Delhi-NCR, Haryana, Punjab in imported liquor tax evasion case

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The Directorate of Enforcement (ED) has conducted search and seizure operations at 10 locations across Delhi-NCR, Haryana, and Punjab in connection with a money laundering investigation linked to the alleged illegal procurement and sale of imported foreign liquor through Gurugram-based liquor vend chain ‘The Theka’.

The searches, carried out by the ED’s Gurugram Zonal Office on Tuesday and Wednesday under the PMLA, covered offices and residences of individuals associated with ‘The Theka’, foreign liquor suppliers, transporters, and others allegedly involved in the liquor syndicate.

According to the ED, the investigation stems from FIRs and charge sheets filed by Haryana Police over allegations of illegal sale of imported foreign liquor and misuse of the bond-to-bond transfer mechanism to evade customs duties and state excise taxes.

The case originated from a complaint by Excise Department officials, who seized 3,921 cases and 176 loose bottles of imported foreign liquor allegedly lacking mandatory holograms and Track & Trace strips from ‘The Theka’ on December 9, 2025. Another FIR was also registered against members of the syndicate for alleged involvement in the sale of spurious liquor.

The ED said its probe revealed that the syndicate exploited the bond-to-bond transfer system, which permits movement of imported liquor between states without immediate payment of customs and excise duties. To facilitate the operation, separate companies were established in Haryana and Goa/Maharashtra and requisite customs licences obtained.

While the liquor was officially meant to be transported to bonded warehouses in Goa or Maharashtra, investigators found that consignments were diverted in connivance with transporters and supplied directly to liquor vends in Gurugram. The liquor was then sold as legitimate imported stock, enabling the syndicate to evade customs duties, VAT, cesses, and other taxes.

The agency alleged that after securing a liquor licence for the 2025-27 period, the syndicate procured and sold imported liquor without holograms and Track & Trace strips to increase profits. More than one lakh bottles of imported liquor were procured and illegally sold between June and November 2025.

According to the ED, the operation yielded profits of 20-25 per cent on illegal sales and generated proceeds of crime exceeding Rs 10 crore.

During the searches, officials recovered and seized incriminating documents, digital records relating to the procurement and movement of imported liquor under customs bond arrangements, and cash amounting to Rs 11 lakh.

Further investigation is underway.

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India’s private credit AUM may triple to $65 billion by 2030: Report

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India-focused private credit assets under management (AUM) projected to increase to $56-65 billion by 2030 from $21.8 billion in CY2025, representing nearly threefold increase and a compound annual growth rate of about 21-24 per cent, a report said on Wednesday.

The report from CareEdge Ratings said India’s private credit market remains at an early stage of development, with penetration of only 0.6 per cent of GDP, compared with 4.4 per cent in the United States and 8.4 per cent in the United Kingdom, indicating substantial room for long-term growth.

India’s credit-to-GDP ratio, which typically ranges between 90 per cent and 102 per cent, rose from 93.8 per cent in 2023 to 95.3 per cent in 2024 and 102.3 per cent in 2025, after declining to 88.3 per cent in 2022.

By comparison, developed economies such as the United States, the United Kingdom and Australia maintain credit-to-GDP ratios of between 140 per cent and 200 per cent.

Private credit is addressing the funding gap for mid-market, growth-stage and asset-light businesses underserved by traditional lenders, with growth being driven by tighter bank lending norms, increasing demand for bespoke financing solutions, a large refinancing opportunity, and strengthening insolvency and recovery framework.

“India’s Private Credit market is expected to reach $56-65 billion by 2030, supported by growing corporate demand for flexible capital beyond standardised lending products. Direct lending, venture debt, special situations and real-estate credit are expected to drive this expansion,” says Tanvi Shah, Senior Director, CareEdge Advisory.

Shah said disciplined underwriting, risk-adjusted pricing and strong covenant protection will be critical to converting market growth into sustainable returns

“Private credit is poised to coexist with, rather than replace, traditional lending channels, strengthening the financing ecosystem through flexible, customised solutions for underserved borrowers,” said Kalpesh Mantri, Assistant Director, CareEdge Advisory.

Direct lending, venture debt and real estate debt are expected to be the fastest-growing strategies in private credit in near future, the report noted.

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