RBI Rolls Out Relief Norms For Natural Calamity Hit Borrowers
Relief measures may include rescheduling payments, moratoriums, converting interest into a credit facility, or sanctioning additional finance: Reports
MUMBAI: The Reserve Bank of India (RBI) on Wednesday rolled out a framework allowing banks and other regulated entities to extend relief measures to borrowers affected by natural calamities without waiting for individual requests.
In the final directions on ‘Relief Measures in areas affected by Calamities’ the central bank clarified the core eligibility threshold, stating that “borrowers affected by natural calamities and classified as ‘standard’, and not in default for more than 30 days on the date of the event, will be eligible for relief measures.”
Relief measures may include rescheduling payments, moratoriums, converting interest into a credit facility, or sanctioning additional finance
The Directions would be effective from July 01, 2026 and would apply prospectively to commercial banks, small finance banks, local area banks, cooperative banks, NBFCs, and All India Financial Institutions.
“Lenders are permitted to extend the relief measures to all borrowers without waiting for a request from them, with an opt-out clause for such borrowers who desire to opt out at any point till the end of 135 days from the date of declaration of natural calamity,” said the RBI.
"Borrower accounts, which may have slipped into NPA between the date of occurrence of the calamity and implementation of the resolution plan, shall be upgraded as 'Standard' upon implementation of the resolution plan," it said.
The central bank has also mandated that a bank should make an additional specific provision of 5 per cent of the outstanding debt in respect of borrowers for whom a resolution plan has been implemented.
The additional specific provisions shall be over and above the applicable prudential provisions, subject to a ceiling of 100 per cent.
