The Ministry of Coal has introduced a major reform by allowing the use of Insurance Surety Bonds (ISBs) as an alternative to Performance Bank Guarantees (PBGs) for coal blocks allocated under the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957.

Under the Coal Blocks Allocation (Amendment) Rules, 2026, coal block allocatees can now choose between furnishing a Performance Bank Guarantee or an Insurance Surety Bond to meet their performance security requirements. Existing allocatees have also been permitted to replace their already submitted bank guarantees with Insurance Surety Bonds, subject to prescribed conditions.

The Ministry said the move is aimed at reducing the financial burden associated with conventional bank guarantees, enabling coal block allocatees to deploy capital more efficiently for mine development and operational activities, while ensuring adequate protection of the Government's interests through appropriate performance security mechanisms.

The amended rules were notified in the Gazette of India on June 22, 2026. The provision will initially apply to coal blocks allocated under the MMDR Act, with the Ministry planning to extend the facility to coal blocks allocated under the Coal Mines (Special Provisions) Act, 2015.

According to the Ministry of Coal, the reform is part of its ongoing efforts to improve the ease of doing business, attract investment, accelerate the operationalisation of coal blocks and create a more transparent and investor-friendly commercial coal mining ecosystem.