The Ministry of Coal has notified the Coal Blocks Allocation (Amendment) Rules, 2026, allowing the use of insurance surety bonds in place of performance bank guarantees for coal blocks allocated under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). The amendment is aimed at improving financial flexibility for coal block allottees and enhancing ease of doing business in the sector.
Under the amended rules, allottees may furnish either a performance bank guarantee or an insurance surety bond to meet performance security obligations. The flexibility has also been extended to existing allottees, who may replace performance bank guarantees already furnished with insurance surety bonds, subject to the prescribed conditions. The measure is expected to reduce the financial burden associated with conventional bank guarantees, improve access to financial instruments, and enable allottees to deploy capital more efficiently for mine development and operational activities. Initially, the provision will apply to coal blocks allocated under the MMDR Act and will subsequently be extended to blocks allocated under the Coal Mines (Special Provisions) Act, 2015.