What changed
The amendment inserts fresh definitions for ‘date of invocation’ and ‘natural calamity’, adds a new paragraph on board‑approved policy for relief measures, and introduces Chapter IV‑A to govern resolution of accounts affected by calamities or disturbances. It also mandates special committee meetings within 15 days of a declared calamity and clarifies that existing relief measures remain governed by earlier norms unless a new resolution is undertaken.
What it means for you
Banks must now align their resolution plans with the new chapter, ensuring that relief measures are documented and approved by the board. The requirement for rapid committee meetings tightens coordination across state and district levels, potentially speeding up decision‑making for affected borrowers. Existing relief provisions stay in force until a fresh resolution is triggered.
What you must do
- Update the board‑approved policy to include the new relief principles and delegation matrix as per paragraph 7A.
- Define and document the ‘date of invocation’ for each resolution plan.
- Implement Chapter IV‑A procedures for accounts impacted by declared calamities.
- Convene SLBC/UTLBC or DCC meetings within 15 days of a calamity declaration.
- Be guided by the principles of the Small Finance Banks resolution framework where applicable.
Who it affects
Local Area Banks, Board of Directors, State/UT Bankers’ Committees, District Consultative Committees, Borrowers affected by natural calamities or disturbances
What does ‘date of invocation’ mean in the new directions?
It refers to the agreed date when the borrower and the bank formalise a resolution plan under Chapter IV‑A, unless a deemed invocation occurs as per earlier provisions.
Which events qualify as a ‘natural calamity’ under the amendment?
Events recognized under the National Disaster Response Fund or State Disaster Response Fund, and similar external events like riots that cause economic loss, are treated as calamities.
What are banks required to do after a calamity is declared?
They must convene the relevant committee (SLBC/UTLBC or DCC) within 15 days, update board policy, and apply Chapter IV‑A guidelines for any new resolution actions.