Home World Economy Srei Group signs MoU with New Zealand based CBL Corporation

Srei Group signs MoU with New Zealand based CBL Corporation


KOLKATA: Srei Group, part of the Kanoria Foundation, has entered into a memorandum of understanding (MoU) with New Zealand’s CBL Corporation to set up a 50:50 joint venture to offer surety and guarantee products in India.

This first of its kind joint venture will offer performance guarantees and sureties to its customers in India for participating in projects in the infrastructure and allied sectors. This unique offering will reduce working capital needs of the players and facilitate project completions without delays, and allow them to grow their businesses.

Elaborating on the newly formed JV, Srei Infrastructure Finance Limited vice chairman Sunil Kanoria said: “We, in partnership with CBL Corporation Ltd, to offer this unique financial solution (performance guarantee or surety) to Indian businesses.” He highlighted that in developed nations like the US, Canada, Germany, a bid bond or surety or performance guarantee is a part of pre-qualification criteria for bidders, especially for government sponsored infrastructure products.

“In India, the market for such instruments has not yet developed. As of now, only banks provide such instruments in India and there is an urgent requirement to develop such products and offerings here”, he added. Company officials claim bringing in credit products such as sureties and guarantees which are widely used in other developed nations can help in bringing about a change, which is the need of the hour. These products can also prove to be a solid alternative to bank guarantees.

According to CBL Corporation managing director Peter Harris, the duo has been working to form the JV for the last 12 months. “India is a vibrant and growing country full of special people. CBL and Srei Group’s joint venture would add to India’s growth aspirations by giving India’s businesses greater options in the guarantee and bonding sector,” said Alistar Hutchison, deputy chairman, CBL.

The two partners plan to research on the regulatory environment that some of these products may encompass and structure an appropriate vehicle to offer these products into the market in the most efficient and regulatory compliant manner. They are in talks with the Reserve Bank of India to see if the joint venture could be registered as a separate category of NBFC such as NBFC-guarantees, Vikash Khandelwal, CEO of the proposed joint venture pointed out.


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