RBI proposes disaster relief framework for banks, seeks feedback

India's central bank has proposed a set of guidelines for banks and other regulated ‍entities on Tuesday, for the ​implementation of resolution plans during natural calamities.

The banks will have to factor the possible impact of natural calamities on borrowers and incorporate provisions for resolutions including relief measures in their credit policies, the Reserve Bank of India said in its draft guidelines.

"The guidelines envisage a ​principle-based resolution regime, providing complete discretion to the RE (regulated entities) with respect to design and implementation of resolution plan," the RBI said.

In recent years, key agricultural states such as Punjab and Assam have reported crop and livelihood losses due to flooding, while flash floods and landslides in Uttarakhand and Jammu and Kashmir have destroyed homes, roads and bridges.

India ranks sixth globally in climate vulnerability, according to the Germanwatch Global Climate Risk Index 2025, which tracked events between 1993 and 2022.

During this period, India experienced over 400 extreme weather ??events, resulting in at least 80,000 deaths and economic losses of around $180 billion.

The ‌resolution plan may include rescheduling of ​payments, conversion of any interest accrued into another credit facility, and granting of moratorium, based on the lender's assessment, according ??to the central bank.

"(It) may also include proposal for sanctioning of additional ??finance ‍to address the financial stress of the borrower," the RBI said.

Borrowers who have not defaulted on their repayments for more than ‍30 ‌days are eligible ​for these relief measures, the RBI added.

The ‍proposed rules will kick in from April 1. The central bank ‍has ‍sought feedback from ‌stakeholders and public until February 17.