What changed
The amendment inserts definitions for 'date of invocation' and 'natural calamity' (linked to NDRF/SDRF). It adds a new Chapter VI-A for resolving accounts impacted by calamities or external events like riots, replacing the old Part E. Banks must now include resolution provisions in board-approved policies, covering relief principles, verifiable parameters, and delegation matrices.
What it means for you
Small Finance Banks must align their stressed asset resolution frameworks with the new calamity-specific chapter, ensuring timely and objective relief measures. The 15-day SLBC/UTLBC meeting mandate accelerates coordination post-calamity declaration. Existing relief accounts are grandfathered, but fresh resolutions must follow the updated guidelines, impacting operational processes and compliance.
What you must do
- Update board-approved policy to include objective principles for relief terms, verifiable parameters, and delegation matrix for resolution under Chapter VI-A.
- Coordinate with SLBC/UTLBC convenor banks to ensure timely meetings within 15 days of calamity declaration.
- Review existing relief accounts to identify those needing fresh resolution under the new chapter post-effective date.
Who it affects
Small Finance Banks, SLBC/UTLBC convenor banks, Borrowers impacted by natural calamities or external events
What is the 'date of invocation' under the new amendment?
It is the date when the borrower and bank agree to proceed with a resolution plan under Chapter VI-A via a documented arrangement, excluding deemed invocation cases.
How is a 'natural calamity' defined for these directions?
It means an event recognized under the National Disaster Response Fund (NDRF) or State Disaster Response Fund (SDRF).
What happens to existing relief accounts when the amendment takes effect?
Accounts with relief measures already provided before the effective date continue under existing guidelines. Any fresh resolution after that date must follow the new Chapter VI-A.