UPSC Prelims Practice Questions — Ministry of Coal Notifies Acceptance of Insurance Surety Bonds for MMDR Coal Blocks

Q1. With reference to the distinction between an Insurance Surety Bond (ISB) and a Performance Bank Guarantee (PBG), consider the following statements: 1. An insurance surety bond is a three-party arrangement involving the principal, the obligee and the surety, whereas a bank guarantee is essentially an undertaking between a bank and the beneficiary. 2. Insurance surety bonds are issued by insurers regulated by the IRDAI, whereas performance bank guarantees are issued by banks. 3. An insurance surety bond requires the contractor to pledge fixed collateral with the insurer equal to the bond value, exactly as a bank guarantee does. Which of the statements given above is/are correct?

1. An insurance surety bond is a three-party arrangement involving the principal, the obligee and the surety, whereas a bank guarantee is essentially an undertaking between a bank and the beneficiary.
2. Insurance surety bonds are issued by insurers regulated by the IRDAI, whereas performance bank guarantees are issued by banks.
3. An insurance surety bond requires the contractor to pledge fixed collateral with the insurer equal to the bond value, exactly as a bank guarantee does.

• A. 1 and 2 only
• B. 1 and 3 only
• C. 2 and 3 only
• D. 1, 2 and 3

Q2. With reference to the Coal Blocks Allocation (Amendment) Rules, 2026, consider the following statements: 1. They permit an allottee to furnish an Insurance Surety Bond as an alternative to a Performance Bank Guarantee. 2. The facility is available to both new allottees and existing allottees, who may convert already-furnished PBGs into ISBs. 3. As notified, the amendment applies to coal blocks allotted under the Mines and Minerals (Development and Regulation) Act, 1957. 4. The amendment makes Insurance Surety Bonds mandatory and discontinues the Performance Bank Guarantee option. Which of the statements given above are correctly identified?

1. They permit an allottee to furnish an Insurance Surety Bond as an alternative to a Performance Bank Guarantee.
2. The facility is available to both new allottees and existing allottees, who may convert already-furnished PBGs into ISBs.
3. As notified, the amendment applies to coal blocks allotted under the Mines and Minerals (Development and Regulation) Act, 1957.
4. The amendment makes Insurance Surety Bonds mandatory and discontinues the Performance Bank Guarantee option.

• A. 1, 2 and 3
• B. 1 and 4 only
• C. 2, 3 and 4
• D. 1, 3 and 4

Q3. Following the notification of the Coal Blocks Allocation (Amendment) Rules, 2026, how many distinct instruments can an allottee of a coal block under the MMDR Act, 1957 now use to satisfy the performance security requirement?

• A. One
• B. Two
• C. Three
• D. Four

Q4. The allocation of coal mines under the Coal Mines (Special Provisions) Act, 2015 is operationalised (auction and allotment) through which of the following?

• A. The Nominated Authority under the Ministry of Coal
• B. The Coal Controller's Organisation
• C. Coal India Limited
• D. Central Mine Planning & Design Institute (CMPDI)

Q5. The Coal Mines (Special Provisions) Act, 2015 was enacted to enable fresh allocation of coal blocks whose earlier allocation was cancelled by the Supreme Court in 2014. How many coal block allocations were cancelled by that judgment?

• A. 131
• B. 204
• C. 218
• D. 239

Q6. Which one of the following is the primary regulatory authority that licenses and governs the issuance of Insurance Surety Bonds in India?

• A. Reserve Bank of India (RBI)
• B. Insurance Regulatory and Development Authority of India (IRDAI)
• C. Securities and Exchange Board of India (SEBI)
• D. Pension Fund Regulatory and Development Authority (PFRDA)

Q7. With reference to the IRDAI (Surety Insurance Contracts) Guidelines, 2022, consider the following statements: 1. Only general insurers registered with the IRDAI may issue surety insurance contracts. 2. Surety insurance contracts may be issued even where the underlying assets or commitments are located outside India. 3. The premium a general insurer underwrites from surety business in a financial year is capped, subject to a monetary ceiling. 4. Financial guarantees such as loan-repayment guarantees fall squarely within the scope of these surety insurance contracts. Which of the statements given above are correctly identified?

1. Only general insurers registered with the IRDAI may issue surety insurance contracts.
2. Surety insurance contracts may be issued even where the underlying assets or commitments are located outside India.
3. The premium a general insurer underwrites from surety business in a financial year is capped, subject to a monetary ceiling.
4. Financial guarantees such as loan-repayment guarantees fall squarely within the scope of these surety insurance contracts.

• A. 1 and 3 only
• B. 2 and 4 only
• C. 1, 3 and 4
• D. 1, 2 and 3

Q8. Which one of the following government authorities is regarded as the leading/first major adopter of Insurance Surety Bonds in lieu of bank guarantees for its infrastructure contracts in India?

• A. Airports Authority of India
• B. National Highways Authority of India (NHAI)
• C. Power Grid Corporation of India Limited
• D. National High Speed Rail Corporation Limited

Q9. With reference to the adoption of Insurance Surety Bonds for NHAI contracts as reported around the 2025 milestone, consider the following: 1. The cumulative value of insurance surety bonds issued for NHAI contracts crossed Rs 10,000 crore. 2. NHAI has accepted insurance surety bonds both as bid security and as performance security. 3. Around twelve insurance companies had issued surety bonds for NHAI contracts. 4. NHAI accepted its very first insurance surety bond only in the financial year 2025-26. Which of the above is/are NOT correct?

1. The cumulative value of insurance surety bonds issued for NHAI contracts crossed Rs 10,000 crore.
2. NHAI has accepted insurance surety bonds both as bid security and as performance security.
3. Around twelve insurance companies had issued surety bonds for NHAI contracts.
4. NHAI accepted its very first insurance surety bond only in the financial year 2025-26.

• A. 4 only
• B. 1 and 3
• C. 2 only
• D. 3 and 4

Q10. The rounds of commercial coal mine auctions, conducted under liberalised ease-of-doing-business terms such as revenue-sharing based on the National Coal Index, are carried out by which of the following ministries?

• A. Ministry of Mines
• B. Ministry of Coal
• C. Ministry of Power
• D. Ministry of Commerce and Industry

Q11. With reference to the organisations under the Ministry of Coal, consider the following statements: 1. Coal India Limited produces coal through seven producing subsidiaries, while CMPDI functions as its exploration and mine-planning arm. 2. Singareni Collieries Company Limited is a joint venture in which the Government of Telangana holds 51% and the Government of India 49%. 3. Neyveli Lignite Corporation India Limited (NLCIL) is a producing subsidiary of Coal India Limited. Which of the statements given above is/are correct?

1. Coal India Limited produces coal through seven producing subsidiaries, while CMPDI functions as its exploration and mine-planning arm.
2. Singareni Collieries Company Limited is a joint venture in which the Government of Telangana holds 51% and the Government of India 49%.
3. Neyveli Lignite Corporation India Limited (NLCIL) is a producing subsidiary of Coal India Limited.

• A. 1 and 2 only
• B. 2 and 3 only
• C. 1 and 3 only
• D. 1, 2 and 3