Mumbai: Banks are allowed to extend relief measures to all borrowers without waiting for their requests, according to the Reserve Bank's revised guidelines for calamity-affected areas, which take effect from July 1.
Following stakeholders' feedback on draft directions on relief measures, the central bank on Wednesday issued a series of directions for commercial banks, small finance banks, local area banks, cooperative banks, NBFCs, and All India Financial Institutions.
Besides, two repeal directions have also been issued.
The guidelines will come into force from July 1, 2026.
"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," the RBI said while issuing the directions.
One of the directions said that a bank may operate its calamity-affected branches from temporary premises under advice to the concerned regional office of the RBI.
Also, it should make arrangements to render banking services in the affected areas by setting up satellite offices, extension counters or mobile banking facilities under intimation to the Reserve Bank.
"A bank shall take immediate action for the restoration of ATM services at the earliest. During the period, it shall provide alternative arrangements to address the immediate cash requirements of the affected areas," it said.
A bank, at its discretion, can provide relief measures such as a waiver / reduction of various fees and charges in respect of customers in the areas where a calamity has been declared for a period not exceeding one year.
Borrowers will be eligible for resolution whose accounts are classified as 'Standard', but which are not in default for more than 30 days with the bank as on the date of occurrence of the calamity.
"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.
In January, the central bank issued draft directions on relief measures in areas affected by natural calamities for stakeholder feedback.
One of the suggestions the RBI received was regarding relaxing the eligibility criterion to include all 'Standard' borrowers, including those overdue up to 89 days.
To this, the central bank said the objective is to provide relief to borrowers impacted by the natural calamity, but who are not stressed otherwise.
"In any case, the revised framework is more relaxed than the extant norms," it added.
Stakeholders had suggested reducing the additional provisioning to nil or capping it at 2 per cent instead of 5 per cent per event of restructuring, but the RBI did not accept it, saying the additional provision balances the heightened risk in such accounts while not subjecting them to higher provisioning applicable to a regular restructured account.
In June 2023, the RBI had proposed to issue guidelines rationalising the extant prudential norms for implementation of resolution plans in respect of exposures affected by natural calamities, inter alia, harmonising the regulatory instructions applicable to different Regulated Entities (REs).
Following stakeholders' feedback on draft directions on relief measures, the central bank on Wednesday issued a series of directions for commercial banks, small finance banks, local area banks, cooperative banks, NBFCs, and All India Financial Institutions.
Besides, two repeal directions have also been issued.
The guidelines will come into force from July 1, 2026.
"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," the RBI said while issuing the directions.
One of the directions said that a bank may operate its calamity-affected branches from temporary premises under advice to the concerned regional office of the RBI.
Also, it should make arrangements to render banking services in the affected areas by setting up satellite offices, extension counters or mobile banking facilities under intimation to the Reserve Bank.
"A bank shall take immediate action for the restoration of ATM services at the earliest. During the period, it shall provide alternative arrangements to address the immediate cash requirements of the affected areas," it said.
A bank, at its discretion, can provide relief measures such as a waiver / reduction of various fees and charges in respect of customers in the areas where a calamity has been declared for a period not exceeding one year.
Borrowers will be eligible for resolution whose accounts are classified as 'Standard', but which are not in default for more than 30 days with the bank as on the date of occurrence of the calamity.
"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.
In January, the central bank issued draft directions on relief measures in areas affected by natural calamities for stakeholder feedback.
One of the suggestions the RBI received was regarding relaxing the eligibility criterion to include all 'Standard' borrowers, including those overdue up to 89 days.
To this, the central bank said the objective is to provide relief to borrowers impacted by the natural calamity, but who are not stressed otherwise.
"In any case, the revised framework is more relaxed than the extant norms," it added.
Stakeholders had suggested reducing the additional provisioning to nil or capping it at 2 per cent instead of 5 per cent per event of restructuring, but the RBI did not accept it, saying the additional provision balances the heightened risk in such accounts while not subjecting them to higher provisioning applicable to a regular restructured account.
In June 2023, the RBI had proposed to issue guidelines rationalising the extant prudential norms for implementation of resolution plans in respect of exposures affected by natural calamities, inter alia, harmonising the regulatory instructions applicable to different Regulated Entities (REs).
