The Reserve Bank of India has amended its 2025 Directions on resolution of stressed assets for all India financial institutions (AIFIs), adding a dedicated framework for borrower exposures affected by natural calamities and, mutatis mutandis, external events such as riots or disturbances that disrupt economic activity. The new chapter sets out when relief can be offered, which borrowers qualify, how quickly plans must be invoked and implemented, and the governance and reporting requirements that AIFIs must follow. The framework applies after a calamity is declared by the Central or State Governments and defines natural calamity as an event recognised under the National Disaster Response Fund or State Disaster Response Fund. Relief will be available for borrowers whose accounts are standard and not more than 30 days in default on the date of occurrence of the calamity. Special State Level Bankers' Committee, Union Territory Level Bankers' Committee, or District Consultative Committee meetings must be convened within 15 days to assess the impact and recommend criteria and any moratorium. Resolution must be invoked within 45 days of the declaration and implemented within 135 days, although AIFIs may act suo motu after the committee recommendation, with an opt-out for borrowers until the end of the 135-day period, and a one-time 30-day extension for invocation may be sought in exceptional cases. Resolution measures may include rescheduling payments, converting accrued interest into another credit facility, and additional finance based on viability assessment. AIFIs must also embed calamity-resolution provisions in their board-approved policies, including objective principles for relief, parameters for determining support, and delegation arrangements. Accounts that have already received relief before the amendments take effect will remain under the existing prudential guidelines, but any fresh resolution after that date must follow the new chapter. The changes do not apply to AIFI refinance portfolios. The amendments take effect from July 1, 2026, and are accompanied by consequential changes to the AIFI directions on credit risk management, income recognition, asset classification and provisioning, and responsible business conduct.
Reserve Bank of India 2026-04-29
Reserve Bank of India introduces calamity-related resolution framework for all India financial institutions with 45-day invocation and July 1 2026 start
The Reserve Bank of India has amended its 2025 Directions on resolution of stressed assets for all India financial institutions, introducing a framework for borrower exposures affected by natural calamities and external events disrupting economic activity. The new chapter sets eligibility criteria, timelines, permissible relief measures, and governance and reporting requirements, with related changes to credit risk, income recognition, asset classification, provisioning, and responsible business conduct. Existing reliefs remain under current prudential norms, while new resolutions after the effective date must follow the new framework, which excludes AIFI refinance portfolios.