Coal Ministry notifies acceptance of insurance surety bonds for coal blocks
The Ministry of Coal has introduced a key reform to provide greater financial flexibility to companies allocated coal blocks by allowing them to choose between a performance bank guarantee and an insurance surety bond for fulfilling their performance security obligations, thus further strengthening the ease of doing business in the coal sector, according to an official statement issued on Thursday.
Through the Coal Blocks Allocation (Amendment) Rules, 2026, the Ministry has enabled the use of insurance surety bonds (ISBs) in place of performance bank guarantees (PBGs) for coal blocks allocated under the Mines and Minerals (Development and Regulation) Act, 1957, the statement said.
The amended framework allows coal block allottees to choose between a performance bank guarantee and an insurance surety bond for fulfilling their performance security obligations. It also extends this flexibility to existing allottees, enabling them to replace PBGs already furnished with ISBs, in accordance with the prescribed conditions, the statement added.
The measure is expected to ease the financial burden associated with conventional bank guarantee arrangements and enable coal block allottees to deploy their capital more efficiently for mine development and operational activities. It will also help improve access to financial instruments while ensuring that the government’s interests remain fully protected through appropriate performance security mechanisms.
The Coal Blocks Allocation (Amendment) Rules, 2026 have been published in the Gazette of India dated June 22, 2026 and may be seen at web link: egazette.gov.in.
The facility of ISBs will be introduced initially for coal blocks allocated under the MMDR Act. The Ministry will also process for extending the provision to coal blocks allocated under the Coal Mines (Special Provisions) Act, 2015.
This initiative reflects the Ministry of Coal’s continued focus on regulatory reforms that encourage investment, support the timely operationalisation of coal blocks and create a more transparent, efficient and investor-friendly ecosystem for commercial coal mining in the country, the statement added.
