RBI proposes principle-based relief framework for borrowers hit by natural calamities; draft open for comments
The Reserve Bank of India has issued draft directions proposing a principle-based resolution regime for loans impacted by natural calamities. The framework would give banks and NBFCs discretion to design and implement relief plans within prescribed windows, and the RBI has invited public comments till February 17, 2026.
What RBI proposed and why
On January 27, 2026, the Reserve Bank of India issued draft directions for regulated entities—such as banks and NBFCs—on how to design and implement resolution plans for exposures affected by natural calamities. The goal is to move from ad hoc relief measures to a clearer, principle-based framework that can be invoked quickly after a disaster and implemented within defined timelines.
The RBI said the draft is part of a broader review and rationalisation of prudential norms for restructuring exposures impacted by disasters, including harmonising instructions across different types of regulated entities.
Key elements: discretion, time windows and classification treatment
Under the draft approach, lenders would get discretion in shaping the resolution plan, including considering local-level coordination mechanisms such as the State Level Bankers’ Committee (SLBC) and District Consultative Committee (DCC). A dedicated window would be prescribed for invoking the framework, followed by a separate window for implementing the plan.
The RBI also proposed a treatment where exposures restructured as part of disaster relief could continue to be classified as ‘Standard’, with income recognition on an accrual basis, along with lower additional specific provisioning compared to other categories of restructured exposures. Separately, it proposed that lenders plan alternate arrangements to maintain banking services in disaster-affected areas.
Public consultation and what stakeholders should watch
The RBI has sought public comments on the draft directions until February 17, 2026. Feedback from banks, NBFCs, borrowers, and state administrations may influence how flexible the final framework is and how quickly relief can be operationalised without weakening credit discipline.
If implemented as proposed, the framework could make disaster-linked relief more predictable for borrowers, while also standardising how lenders design repayment rescheduling and other support measures under regulatory supervision.