Ministry of Coal introduces key reform to provide greater financial flexibility to coal sector

New Delhi,July 02
The Ministry of Coal has introduced a key reform to provide greater financial flexibility to coal block allocators and further strengthen the ease of doing business in the coal sector. 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 Ministry said that the amended framework allows coal block allocators to choose between a Performance Bank Guarantee and an Insurance Surety Bond for fulfilling their performance security obligations. It added that the framework extends this flexibility to existing allocations, enabling them to replace PBGs already furnished with ISBs in accordance with the prescribed conditions.

The Ministry emphasized that the measure is aimed at easing the financial burden associated with conventional bank guarantee arrangements and enable coal block allocators to deploy their capital more efficiently for mine development and operational activities.