bank guarantees

In a significant move to enhance the “ease of doing business” and unlock capital for the coal industry, the Ministry of Coal has officially permitted coal block allottees to use Insurance Surety Bonds (ISBs) as a substitute for traditional Performance Bank Guarantees (PBGs). Formalized through the Coal Blocks Allocation (Amendment) Rules, 2026, this reform allows companies to replace collateral-heavy bank guarantees with more flexible insurance instruments, effectively freeing up significant working capital for mine development and operational efficiency. By aligning the coal sector with broader financial reforms initiated by the Ministry of Finance and following precedents set by the National Highways Authority of India (NHAI) and the Ministry of Power, this policy shift marks a strategic transition toward a more liquid, risk-based financial environment for India’s energy infrastructure.