New Delhi: The Coal Ministry on Thursday said entities allocated coal blocks can now use insurance surety bonds instead of performance bank guarantees to meet performance security obligations.
The decision was announced on July 2, 2026, and applies to all coal block allottees.“The measure is expected to ease the financial burden associated with conventional bank guarantee arrangements and enable coal block allottees to deploy their capital more efficiently for mine development and operational activities,” the Ministry said in a statement.
It added that the move will also help improve access to financial instruments while ensuring that the Government’s interests remain fully protected through appropriate performance security mechanisms.
Performance bank guarantees require companies to lock up significant capital with banks. Insurance surety bonds, offered by general insurers, provide the same security without tying up liquid funds, potentially freeing up capital for faster mine development.
The policy change is part of broader efforts to reduce compliance costs and improve ease of doing business in the coal sector.
