Reserve Bank had announced, as part of the Statement on Developmental and Regulatory Policies dated June 08, 2023, 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). Based on a comprehensive review of the existing regulatory instructions, including the scope, coverage and prudential requirements, the following draft Directions are being issued for public comments.

1. Commercial Banks - Relief Measures in areas affected by Natural Calamities

2. Small Finance Banks - Relief Measures in areas affected by Natural Calamities

3. Local Area Banks - Relief Measures in areas affected by Natural Calamities

4. Urban Co-operative Banks - Relief Measures in areas affected by Natural Calamities

5. Regional Rural Banks - Relief Measures in areas affected by Natural Calamities

6. Rural Co-operative Banks - Relief Measures in areas affected by Natural Calamities

7. Non-Banking Financial Companies - Relief Measures in areas affected by Natural Calamities

8. All India Financial Institutions - Relief Measures in areas affected by Natural Calamities

2. The following salient features have been incorporated in the draft guidelines:

1. The guidelines envisage a principle-based resolution regime, providing complete discretion to the RE with respect to design and implementation of resolution plan, inter alia taking into consideration the decisions of the State Level Bankers’ Committee (SLBC) / District Consultative Committee (DCC).

2. The exposures which have been affected by the natural calamity and which are ‘Standard’ but in default up to 30 days i.e., ‘SMA-0’ on the date of occurrence of the natural calamity, shall be eligible to be considered for relief under the guidelines.

3. To ensure timely implementation of relief measures, a dedicated window has been prescribed for invocation of the resolution framework along with a separate window for implementation of Resolution Plan (RP), post invocation.

4. Exposures restructured as part of relief measures shall continue to be classified as ‘Standard’ with income recognition on accrual basis, with reduced additional specific provisioning vis-à-vis other restructured exposures.

5. REs shall make alternate arrangements for providing banking services in the natural calamity affected areas.

3. The guidelines will come into force from April 01, 2026.

4. The comments on the draft guidelines are invited from public / stakeholders by February 17, 2026. The comments/ feedback may be submitted through the link under the ‘Connect2Regulate’ Section available on the Reserve Bank’s website. Comments may alternatively be forwarded to The Chief General Manager, Credit Risk Group, Department of Regulation, Central Office Reserve Bank of India, 12th / 13th Floor Shahid Bhagat Singh Marg, Fort Mumbai – 400 001 or by email.

(Brij Raj)           
Chief General Manager

Natural calamity relief measures allow banks discretion to restructure short-default standard exposures with reduced provisioning. A principle-based resolution regime allows Regulated Entities discretion to design and implement resolution plans for exposures affected by natural calamities. Eligible exposures are those classified as Standard but in default up to 30 days (SMA-0) at the time of the calamity. A dedicated invocation window and a separate implementation window are prescribed. Restructured exposures remain Standard with accrual income recognition and reduced additional specific provisioning. REs must arrange alternate banking services in affected areas. The draft harmonises prudential norms across RE categories and invites stakeholder comments.