Coal block allottees now have option to produce insurance surety bonds

New Delhi: The Government has permitted coal block allottees to furnish insurance surety bonds as an alternative to performance bank guarantees, providing greater financial flexibility to them and strengthening ease of doing business.

The measure is likely 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.

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The Government has amended the coal blocks allocation rules in this regard.

Performance bank guarantees, provided by coal block allottees to ensure they meet allocation conditions — including prompt mine development — can now be replaced by insurance surety bonds under the amended rules, giving companies an additional way to fulfill these obligations.

"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 coal ministry said.

The amended framework also extends this flexibility to existing allottees enabling them to replace PBGs already furnished with ISBs in accordance with the prescribed conditions.

"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," it said.

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This initiative reflects the coal ministry'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.

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