What changed
The amendment inserts definitions for 'date of invocation' and 'natural calamity' (linked to NDRF/SDRF). It replaces the existing Part B on natural calamities with a new Chapter IV-A that applies to calamities declared by central/state governments, including external events like riots. Banks must now have board-approved policies for resolution under this chapter, guided by the Small Finance Banks' stressed asset directions.
What it means for you
RRBs must update their board-approved policies to include objective principles for relief measures, delegation matrices, and timely implementation. The new chapter harmonizes resolution norms across regulated entities, ensuring consistency. Existing relief measures remain valid, but any fresh resolution post-effective date must follow the new guidelines, impacting how banks handle borrower accounts affected by calamities.
What you must do
- Update board-approved policies to include provisions for resolution under Chapter IV-A, covering relief principles, verifiable parameters, and delegation matrix.
- Ensure SLBC/UTLBC convenor banks convene special meetings within 15 days of a calamity declaration for coordination.
- Review existing relief measures; accounts already provided relief continue under old norms, but new resolutions must follow the amended directions.
- Align resolution processes with the Reserve Bank of India (Small Finance Banks – Resolution of Stressed Assets) Directions, 2025 as referenced.
Who it affects
Regional Rural Banks (RRBs), State Level Bankers' Committees (SLBCs), Union Territory Level Bankers' Committees (UTLBCs), District Consultative Committees (DCCs), Borrowers impacted by natural calamities or external events
What is the 'date of invocation' under the new directions?
It is the date when the borrower and bank agree to proceed with a resolution plan under Chapter IV-A through a documented arrangement, except in cases of deemed invocation as specified in paragraph 32O.
Do these directions apply to accounts already under relief measures?
No, accounts where relief measures were already provided before the effective date of these amendment directions continue under existing prudential guidelines. However, any fresh resolution after the effective date must follow the new Chapter IV-A.
What events are covered under 'calamity' in the new chapter?
Natural calamities recognized under NDRF/SDRF, and external events like riots or disturbances that cause loss to economic activity, as declared by central or state governments.