New Delhi, 02 July (H.S.): The Central Government has approved the use of Insurance Surety Bonds (ISBs) in place of Performance Bank Guarantees (PBGs) for allocated coal blocks, in a significant move aimed at improving the ease of doing business in the coal sector. The Ministry of Coal has notified the acceptance of Insurance Surety Bonds for coal blocks allocated under the Mines and Minerals (Development and Regulation) Act, 1957.

In a statement issued on Thursday, the Ministry of Coal said the reform has been introduced to provide greater financial flexibility to coal block allottees and further strengthen the ease of doing business in the sector. Through the Coal Block Allocation (Amendment) Rules, 2026, the ministry has permitted the use of Insurance Surety Bonds as an alternative to Performance Bank Guarantees for coal blocks allocated under the Mines and Minerals (Development and Regulation) Act, 1957.

The Coal Block Allocation (Amendment) Rules, 2026, were published in the Gazette of India through Notification G.S.R. 508(E) dated June 22, 2026. Under the revised framework, the facility will initially be available for coal blocks allocated under the MMDR Act. The ministry also said it will initiate the process of extending the provision to coal blocks allocated under the Coal Mines (Special Provisions) Act, 2015.

According to the ministry, the amended rules provide coal block allottees with the flexibility to fulfil their performance security obligations by choosing either a Performance Bank Guarantee or an Insurance Surety Bond. The provision will also apply to existing allottees, enabling them to replace previously submitted Performance Bank Guarantees with Insurance Surety Bonds, subject to the prescribed conditions.

The ministry said the reform is expected to reduce the financial burden associated with the conventional bank guarantee system, allowing coal block allottees to utilise their capital resources more efficiently for mine development and operational activities. It is also expected to improve their access to financial instruments while ensuring that the government's interests remain fully protected through an appropriate performance security mechanism.

The Ministry of Coal said the initiative reflects its continued commitment to regulatory reforms that encourage investment, support the timely operationalisation of coal blocks, and promote a more transparent, efficient and investor-friendly ecosystem for commercial coal mining in India.

---------------

Hindusthan Samachar / Jun Sarkar