Govt Notifies Amended Coal Block Rules, Allows Insurance Surety Bonds Over Bank Guarantees

New Delhi, Jul 2 (KNN) The Ministry of Coal has amended the Coal Blocks Allocation Rules, 2026 to allow 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) (MMDR) Act, 1957.

Under the amended rules, coal block allottees can choose either a Performance Bank Guarantee or an Insurance Surety Bond to meet their performance security obligations. 

Existing allottees will also be permitted to replace Performance Bank Guarantees already submitted with Insurance Surety Bonds, subject to the prescribed conditions.

According to the ministry, the amendment is intended to provide greater financial flexibility by reducing the dependence on conventional bank guarantees and allowing companies to utilise capital for mine development and operational activities.

The Coal Blocks Allocation (Amendment) Rules, 2026 were notified in the Gazette of India on June 22, 2026. The Insurance Surety Bond facility will initially apply to coal blocks allocated under the MMDR Act, with the ministry stating that it will also process its extension to coal blocks allocated under the Coal Mines (Special Provisions) Act, 2015.

(KNN Bureau)