The Reserve Bank of India issued draft Directions for public comment to rationalise existing prudential norms for implementing resolution plans for exposures affected by natural calamities and to harmonise instructions across different regulated entities. The draft framework is intended to move to a principle-based regime that gives regulated entities discretion to design and implement resolution plans, while taking into account decisions of the State Level Bankers’ Committee and District Consultative Committee. Relief would be available for exposures impacted by a natural calamity that were classified as standard but in default up to 30 days, meaning SMA-0, on the date the calamity occurred. The draft also introduces dedicated windows for invocation of the resolution framework and for implementation of the resolution plan after invocation, allows restructured exposures under the relief measures to continue as standard with income recognised on an accrual basis alongside reduced additional specific provisioning relative to other restructured exposures, and requires alternate arrangements to provide banking services in affected areas. The Directions are issued separately for commercial banks, small finance banks, local area banks, urban co-operative banks, regional rural banks, rural co-operative banks, non-banking financial companies, and All India financial institutions. Comments are due by 17 February 2026. The guidelines are set to come into force from 1 April 2026.

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