The Reserve Bank of India (RBI) issued final guidelines on 29 April 2026 for the restructuring of loans of borrowers affected by natural calamities. The framework applies prospectively from 1 July 2026 to commercial banks, small finance banks, local area banks, cooperative banks, non-banking financial companies, and All India Financial Institutions.
Scope of the Relief Framework
The rules cover calamities recognised under the National Disaster Response Fund and State Disaster Response Fund mechanisms. Lenders can invoke the resolution framework within 45 days of the calamity declaration and implement it within 90 days thereafter.
Eligibility and Borrower Conditions
Borrowers qualify for relief if their accounts are classified as Standard on the date of the calamity and are not overdue by more than 30 days with the lender. Banks and NBFCs can extend relief suo motu, and borrowers have an opt-out window of 135 days from the date of declaration of the natural calamity.
Relief Measures and Provisioning
The framework permits rescheduling of payments, moratoriums, conversion of interest into a credit facility, and sanction of additional finance. Lenders must make an additional specific provision of 5% of the outstanding debt for borrowers whose resolution plans have been implemented.
Insurance and Branch Continuity
The RBI has permitted lenders to factor in insurance payouts while restructuring loans and to adjust such proceeds against restructured accounts, including cases where fresh loans are extended. Banks can operate calamity-hit branches from temporary premises and can also set up satellite offices, extension counters, or mobile banking units.
Disaster-Linked Credit Relief
Natural calamity relief in the banking system is linked to disaster classification under the NDRF and SDRF frameworks. The RBI framework provides a formal mechanism for loan restructuring, temporary payment relief, and branch-level service continuity after disaster events.
Last Modified: April 30, 2026