The dense and industrialized populace in the mining areas of Jharia Coalfield (JCF) is plagued by a severe shortage of water supply. The unutilized pumped out coal minewater discharges may be utilized to cater to the increasing water demand of the region but it runs the risk of getting contaminated from domestic and industrial effluents. The current study aimed to assess the suitability of augmenting underground minewater for potable purposes. For this purpose, ninety underground minewater samples collected from 15 locations across JCF for the hydrological year 2019–2020 were analysed to gain an insight on the physicochemical characteristics of the minewater using an integrated approach of standard hydrochemical methods, integrated water quality index (IWQI), heavy metal pollution index (HPI), and multivariate statistical analysis. For the minewater quality to be deemed suitable for potable purposes, both IWQI (lower than 2) and HPI (lower than 30) values were considered. IWQI values of the minewater samples from the study area ranged from 1.97 to 5.08, while the HPI values ranged from 18.40 to 53.05. The pH of the samples were found to be mildly acidic to alkaline (6.5 to 8.3) with varying total hardness (149 to 719 mg L−1), total dissolved solids (341 to 953 mg L−1), and electrical conductivity (568 to 1389 µS cm−1), reflecting heterogeneity in underlying hydrosystems, variations in geological formations, and the influence of lithogenic and anthropogenic processes on the water chemistry of the region, which was corroborated by the principal component analysis (PCA) and hierarchical cluster analysis (HCA) of the minewater samples. Two major water types of the region were identified, viz., Ca–Mg–HCO3 and Ca–Mg–Cl–SO4. This multiparametric approach gives a holistically accurate assessment of the minewater quality, overcoming the limitations of traditional water quality indices and facilitating time-saving and effective water management practices, and sets the foundation for augmenting minewater for potable purposes to meet increasing demands.