Relief Measures in areas affected by Natural Calamities by RBI circular dt 27th Jan 2026 – Draft – Non-Banking Financial Companies
Summary: The Reserve Bank of India has issued a comprehensive regulatory framework to provide structured relief to borrowers affected by natural calamities and similar external events, applicable to banks, NBFCs, and financial institutions, effective from 1 April 2026. For Non-Banking Financial Companies, the framework becomes operational upon a formal declaration by the Central or State Government and decisions taken in special SLBC/DCC meetings. Relief is restricted to standard accounts not overdue by more than 30 days as on the date of the calamity. Permissible measures include rescheduling of repayments, moratoriums, conversion of interest into funded facilities, and sanction of additional finance based on borrower viability. Resolution must be invoked within 45 days and implemented within 90 days. Standard asset classification may be retained or restored, subject to an additional 5% specific provision. The framework also addresses income recognition norms, treatment of insurance proceeds, acceptance of alternative land ownership certificates, optional fee waivers, and mandatory half-yearly reporting of relief measures or NIL returns by NBFCs.
The RBI has issued measures to provide relief in areas affected by natural calamities.
These measures apply to the following entities:
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Commercial Banks
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Small Finance Banks
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Local Area Banks
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Urban Co-operative Banks
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Regional Rural Banks
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Rural Co-operative Banks
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Non-Banking Financial Companies (NBFCs)
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All India Financial Institutions
These guidelines shall come into force with effect from April 1, 2026.
Non-Banking Financial Companies
Measures for relief for Non-Banking financial companies
- Applicable to resolution of exposures of borrowers impacted by a natural calamity or, mutatis mutandis, exposures of borrowers impacted by external events (such as riots / disturbances that result in loss to economic activity).
- These Directions shall come into effect upon the declaration, by Central / State Governments
- The decisions taken in the special SLBC / DCC meeting shall be communicated to the NBFCs by the convenor of the respective SLBC / DCC
- The decisions of the special SLBC / DCC meeting (s) shall be given adequate publicity by NBFCs through various methods such as brochures, banners, advertisement in newspapers, visits by field staff, and other suitable modes, for the benefit of affected borrowers.
- Credit assessments carried out by a NBFC shall suitably factor in the possible impact of natural calamities on borrowers who may be impacted by such events. The credit policy of the NBFC shall incorporate provisions for resolution as provided for under these Directions, including the objective principles for the terms of relief to be granted to various borrower / loan categories.
- The credit policy shall specify the potential relief measures and the verifiable parameters for making such determination.
- The credit policy shall also lay down the delegation matrix for deciding and implementing relief measures (if any), including for restructuring, sanction of additional finance etc., with focus on the timely implementation of relief measures.
- In case of other external events, upon declaration of such events by the Government concerned, SLBC / DCC shall adopt similar procedure as stated above, for providing relief to the affected borrowers.
- Only those borrowers shall be eligible for resolution under these guidelines whose accounts are classified as ‘Standard’, and also not in default for more than 30 days with a NBFC in respect of any of their facilities, as on the date of occurrence of the natural calamity.
- The resolution plan to be implemented by a NBFC, conforming to these Directions, may include rescheduling of payments; conversion of any interest accrued or to be accrued into another credit facility; granting of moratorium etc. based on an assessment of the viability prospects of the borrower.
- The resolution plan may also include proposal for sanctioning of additional finance to address the financial stress of the borrower, subject to due assessment of the viability prospects of the borrower.
- Resolution under these guidelines shall be invoked no later than 45 days (unless an extension has been granted by the Regional Director / Officer-in-Charge of Reserve Bank) from the date of the declaration of natural calamity and shall be implemented within 90 days from the date of the invocation.
- If a resolution plan is implemented in adherence to the provisions of these Directions, borrower accounts which are classified as ‘Standard’ may be retained as such upon implementation.
- Borrower accounts which may have slipped into non-performing asset (NPA) between the date of occurrence of the natural calamity and implementation of the resolution plan, shall be upgraded as ‘Standard’, upon implementation of the resolution plan.
- Interest income recognition in respect of such borrower accounts shall be on accrual basis.
- However, a NBFC shall make an additional specific provision of five percent of the outstanding debt against such borrower accounts.
- The additional specific provisions shall be over and above the applicable prudential provisions subject to a ceiling of hundred per cent.
- Interest income shall be recognized on cash basis from the second restructuring onwards.
- While restructuring various types of loans in an area affected by a natural calamity, NBFCs may also take into account the insurance proceeds, if any, receivable from insurance companies in respect of those loans.
- The insurance proceeds upon receipt shall be adjusted towards the ‘restructured accounts’ in cases where fresh loans have been granted to the borrower.
- However, a NBFC may consider restructuring and sanctioning fresh loans without waiting for the actual receipt of the claim.
- Interest Subvention/ Prompt Repayment Incentive benefits as notified by the Government from time to time shall be made available to the eligible categories of borrowers without any exception.
- While extending the relief measures under these guidelines, a NBFC shall ensure that the relief measures already provided/ being provided by GoI / States are duly factored in.
- For agricultural loans, where land is taken as security, certificate issued by the Revenue Department officials, in the absence of original title record, shall be accepted for financing to farmers who have lost proof of their title such as title deed or registration certificate issued to registered share-croppers.
- In the areas covered by the Sixth Schedule of the Constitution, whereby the land is owned by the community, certificate issued by community authorities shall be accepted.
- A NBFC at its discretion, may provide further relief measures such as waiver/reduction of various fees and charges in respect of customers in the affected areas, for a period not exceeding one year.
- NBFCs shall upload the data on relief measures as per the format given
- In case no relief measures are extended, a ‘NIL’ statement shall be uploaded by the NBFC.
Annex
Data Reporting Format |
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Type of Regulated Entity (RE) |
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Data on Relief measures extended by REs on account of natural calamities- OVERALL |
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For Half Year ended_____ |
Return has to be submitted in Actuals only |
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Sl.
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Name of
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Name of
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Date of
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Type of
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Date (s) of
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Sector |
Outstanding
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Credit facilities
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% achievement of
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Out of 9 & 10, Credit
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Additional /fresh
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Remarks
|
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No. of A/cs |
Amt. |
No. of A/cs |
Amt. |
No. of A/cs (9/7) |
Amt. (10/8) |
No. of A/cs |
Amt. |
No. of A/cs |
Amt. |
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1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
14 |
15 |
16 |
17 |
|
1 |
State Name(Drop down from CISBI master) |
District
|
Date |
(Type to be selected dropdown) |
from Date |
(Sector will
|
J9/H9 |
K9/I9 |
Text Data |
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* District to be specified if the
decision to extend relief measures
is by DCC
Author Bio
Well-articulated coverage of RBI’s draft Natural Calamity Relief Framework by CMA Harshada Prabhune. The proposal brings much-needed clarity for NBFCs while maintaining prudential discipline. A timely initiative considering increasing climate-related risks.