RBI/FIDD/2018-19/64
Master Direction FIDD.CO.FSD.BC No.9/05.10.001/2018-19
October
17, 2018
The Chairman/Managing
Director/Chief Executive Officer
All scheduled commercial banks
(including Small Finance Banks and excluding Regional Rural Banks)
Madam / Sir,
Master Direction – Reserve Bank
of India (Relief Measures by Banks in Areas affected by Natural Calamities)
Directions 2018 – SCBs
Please refer to our ‘Master Direction FIDD.No.FSD.BC.8/05.10.001/2017-18
dated July 3, 2017’ incorporating guidelines issued to banks in
regard to matters relating to relief measures to be provided in areas
affected by natural calamity.
This Master Direction consolidates all the guidelines
issued on the subject till date. The list of circulars compiled into this
Master Direction is given in the Appendix.
Please acknowledge receipt.
Yours faithfully,
(G. P. Borah)
Chief General Manager-in-Charge
Reserve
Bank of India (Relief Measures by Banks in Areas Affected by Natural
Calamities) Directions, 2018
In exercise of the powers
conferred under Sections 21 and 35A of the Banking Regulation Act, 1949,
the Reserve Bank of India being satisfied that it is necessary and expedient
in the public interest so to do, hereby, issues the Directions hereinafter
specified.
CHAPTER
I
PRELIMINARY
1.1 Short Title and
Commencement.
(a) These Directions shall be
called the Reserve Bank of India (Relief Measures by Banks in Areas
Affected by Natural Calamities) Directions, 2018.
(b) These Directions shall come
into effect on the day they are placed on the official website of the
Reserve Bank of India.
1.2. Applicability
The provisions of these
Directions shall apply to Scheduled Commercial Banks {including Small
Finance Banks (SFBs) and excluding Regional Rural Banks(RRBs)} licensed to
operate in India by Reserve Bank of India.
CHAPTER
II
BACKGROUND
2.1 Periodic occurrence of a
natural calamity takes a heavy toll on human life and cause wide- spread
damage to economic pursuits in one or the other parts of the country. The
devastation caused by a natural calamity calls for massive rehabilitation
effort from all agencies. The Central, State and Local Authorities draw up
programmes on economic rehabilitation for the people affected by the
occurrence of a natural calamity. The developmental role assigned to the
commercial banks including small finance banks warrant their active support
in reviving the economic activities of those affected by the occurrence of
a natural calamity.
2.2 In terms of the National
Disaster Management Framework, there are two funds constituted viz.
National Disaster Response Fund (NDRF) and State Disaster Response Fund
(SDRF) for providing relief in the affected areas. The NDRF framework
currently recognizes twelve types of natural calamities viz. cyclone,
drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche,
cloud burst, pest attack and cold wave/frost. The Ministry of Agriculture
is the nodal point for four of the calamities i.e. drought, hailstorms,
pest attack and cold wave/frost and for the remaining eight, the Ministry
of Home Affairs is the nodal ministry to make the necessary administrative
arrangements. A slew of measures for relief are undertaken by the Sovereign
(Central/State Government) from time to time to provide relief to the
affected people including, inter alia, provision for input subsidies and
financial assistance to farmers including small and marginal farmers.
2.3 The role of the scheduled
commercial banks including small finance banks (SFBs) is to provide relief
measure through rescheduling of existing loans and sanctioning fresh loans
as per the emerging requirement of the borrowers. To enable banks to take a
uniform and concerted action expeditiously, these directions are issued
covering four aspects viz. Institutional Framework (Chapter III), Restructuring of Existing Loans (Chapter IV), Providing Fresh Loans (Chapter V) and Other Ancillary Relief Measures (Chapter VI).
CHAPTER
III
INSTITUTIONAL
FRAMEWORK
3.1 Establishing
Policy/Procedures for dealing with Natural Calamities
The area, time of occurrence and
intensity of a natural calamity cannot be anticipated. It is therefore,
imperative that banks have a blueprint of action duly approved by the Board
of Directors for such eventualities so that the required relief and
assistance are provided with utmost speed and without any loss of time.
Further, all Divisional/Zonal Offices and branches of scheduled
commercial/small finance banks shall be familiar with these standing
instructions. The standing instructions shall immediately come to force
after the district/state authorities put in place the requisite
declaration. It is essential that these instructions shall also be made
available to the State Government authorities and the District Collector so
that all concerned are aware about the action that shall be taken by the
concerned authorities in the affected area.
3.2 Discretionary Powers to
Divisional / Zonal Manager of banks
The Divisional/Zonal Managers of
scheduled commercial/SF banks may be vested with certain discretionary
powers to avoid the need to seek fresh approval from their Head
Office/Controlling Office regarding the line of action decided by the
District Consultative Committee/State Level Bankers’ Committee. Some of the
areas, among others where such discretionary powers are vital may be the
adoption of scale of finance, need
based restructuring of loans,
extension of loan period, margin, security, sanction of new loan keeping in
view the total liability of the borrower arising out of the old loan where
the asset financed was damaged or lost as a result of the natural calamity
and the new loan to be financed for creation/repair of such asset(s).
3.3 Meeting of State Level Bankers’
Committee (SLBC)/District Consultative Committee (DCC)
3.3.1 In the event of occurrence
of a natural calamity which covers a larger part of a State, the State
Level Bankers’ Committee convener bank shall convene a special SLBC meeting
immediately. The committee, in collaboration with the State Government
Authorities shall evolve a coordinated action plan for implementing the
relief programme. If the calamity has affected only a small part of the
state/few districts, the convener of the District Consultative Committee of
the affected district(s) shall convene a meeting immediately. In the
special SLBC/DCC meeting, the position of the affected areas may be
assessed so as to ensure speedy formulation and implementation of suitable
relief measures.
3.3.2 In the areas where the
calamity is severe, the relief measure(s) implemented shall be reviewed
periodically through a specially constituted Task Force/Sub-Committee by
way of weekly/fortnightly meetings as decided by the SLBC/DCC.
3.4 Scope
The Master Directions shall
apply be applicable to farmers/loanees who have been affected by a natural
calamity as declared by the State Government/Authorities and are willing to
avail the benefits under the guidelines.
3.5 Declaration of Natural
Calamity
3.5.1 It is recognised that
declaration of a natural calamity is the domain of the Central/ State
Governments. The inputs received from the State Governments revealed that
there is no uniform procedure being followed for declaration of a natural
calamity and issue of declarations/certificates. The
declarations/certificates are called by different names such as Annewari,
Paisewari, Girdawari, etc. in different States. Nevertheless, the common
thread to extend relief measure towards agricultural loans including
rescheduling of loans by banks, is that the crop loss assessed should be
33% or more. For assessing this loss, while some States are conducting crop
cutting experiments to determine the loss in crop yield, some others are
relying on the eye estimates/visual impressions.
3.5.2 In extreme situations such
as wide-spread floods, when it is largely evident that most of the standing
crops have been damaged and/or land and other assets have suffered a
wide-spread damage, the matter shall be deliberated by State Government/District
Authorities in a specially convened SLBC/DCC meeting where the concerned
Government functionary/District Collector shall explain the reasons for not
estimating ‘Annewari’ (percentage of crop loss – by whatever name called)
through crop cutting experiments and that the decision to provide relief
for the affected populace needs to be taken based on the eye
estimate/visual impressions.
3.5.3 In both the cases,
however, SLBC/DCC shall satisfy themselves fully that the crop loss has
been 33% or more before acting on these pronouncements.
CHAPTER
IV
RESTRUCTURING
OF EXISTING LOANS
In the event of a natural
calamity, the repaying capacity of the people may get severely affected due
to the disruption of their economic activities and loss/damage of economic
assets. Therefore, relief in loan repayment by restructuring the existing
loan may become necessary.
4.1. Agriculture Loans:
Short-term Production Credit (Crop Loans)
4.1.1 All short-term loans
except those which are overdue at the time of occurrence of the natural
calamity shall be eligible for restructuring. The principal amount of the
short-term loan as well as interest due for repayment in the year of
occurrence of the natural calamity shall be converted into term loan.
4.1.2 The repayment period of
the restructured loan may vary depending on the severity of the calamity,
the impact on loss/damage of economic assets and distress it caused. A
maximum repayment period of up to two years (including the moratorium
period of one year) shall be allowed if the loss is between 33% and 50%. If
the crop loss is 50% or more, repayment period may be extended upto a
maximum of five years (including the one year moratorium period).
4.1.3 In all restructured loan
accounts, moratorium period of at least one year shall be considered. Banks
may not insist on additional collateral security for such restructured
loans.
4.2 Agriculture Loans: Long term
(Investment) Credit
4.2.1 The existing term loan
instalments shall be rescheduled keeping in view the repaying capacity of
the borrower and the nature of natural calamity viz.
4.2.1.1 In a natural calamity
where only crop of that year is damaged and productive assets are not
damaged, banks shall reschedule the payment of instalment during the year
of natural calamity and extend the loan period by one year. Under this
arrangement the instalments defaulted wilfully in earlier years shall not
be eligible for rescheduling. The banks may also have to postpone payment
of interest by borrowers.
4.2.1.2 In a natural calamity
where the productive assets are partially or totally damaged and borrowers
are in need of a new loan, the rescheduling by way of extension of loan
period shall be determined on the basis of overall repaying capacity of the
borrower vis-a-vis total liability (old term loan, restructured crop loan,
if any, and the fresh crop/term loan being given) less the subsidies
received from the Government Agencies and compensation available under the
insurance schemes etc. While the total repayment period for the
restructured/fresh term loan may differ on case-to-case basis, generally it
shall not exceed a period of five years.
4.3 Other Loans
4.3.1 Depending on the severity
of a natural calamity, SLBC/DCC shall take a view as to whether a general
rescheduling of all other loans (i.e. besides the agriculture loans) such
as loans granted for allied activities, loans to rural artisans, traders,
micro/small industrial units or in case of extreme situations, medium
enterprises are required. If such a decision is taken, while recovery of
all the loans be postponed by the specified period, banks may assess the
requirement of the individual borrowers in each case and depending on the
nature of her/his account, repayment capacity and the need for fresh loans,
appropriate decisions shall be taken by the individual banks.
4.3.2 The primary consideration
for extending credit to any unit for its rehabilitation shall be based on
the viability of the venture as assessed by the bank.
4.4 Asset Classification
The asset classification status
of the restructured loans shall be as under:
4.4.1 The restructured portion
of the short term as well as long-term loans may be treated as current dues
and need not be classified as NPA. The asset classification of these term
loans would thereafter be governed by the revised terms and conditions.
Nevertheless, banks are required to make higher provisions for the
restructured standard advances as prescribed by the Department of Banking
Regulation1 from time to time. Further, interest income from such restructured accounts
classified as ‘standard assets’ will be recognized as per the norms prescribed
in the DBR guidelines.
4.4.2. The asset classification
for the remaining dues, that does not form a part of the restructured
portion, shall continue to be governed by the original terms and conditions
of its sanction. Consequently, the dues from the borrower shall be
classified by the lending bank under different asset classification
categories viz. standard, sub-standard, doubtful and loss.
4.4.3. Additional finance, if
any, shall be treated as “standard asset” and its future asset
classification will be governed by the terms and conditions of its
sanction.
4.4.4. With the objective to
ensure that banks are proactive in extending relief to the affected
persons, the benefit of asset classification of the restructured account as
on the date of natural calamity shall be available only if the
restructuring is completed within a period of three months from the date of
declaration of the natural calamity by the Government. In the event of
extreme calamity, when the SLBC/DCC is of the view that this period shall
not be sufficient for the banks to reschedule all the affected loans, it shall approach the Chief General Manager, Reserve
Bank of India, Financial Inclusion and Development Department, Central
Office, Mumbai through the concerned Regional Director of RBI. The request
shall detail the reasons for not completing the exercise within the
stipulated timeframe and outcome anticipated from such an extension. Such
requests along with the specific recommendations of the Regional Director
shall be considered on the merit of each case.
4.4.5 The accounts that are
restructured for the second time or more on account of recurrence of
natural calamities shall retain the same asset classification category on
each restructuring. Accordingly, for a restructured standard asset, the
subsequent restructuring necessitated on account of a natural calamity
shall not be treated as second restructuring, i.e., the standard asset
classification shall be maintained. However, all other restructuring norms
shall apply.
4.5 Utilization of Insurance
Proceeds
4.5.1 While the above measures
relating to rescheduling of loans are intended to provide relief to the
farmers, the insurance proceeds shall, ideally compensate the losses. In
terms of orders issued by the Ministry of Agriculture, Department of
Agriculture, Cooperation and Farmers Welfare, the Pradhan Mantri Fasal Bima
Yojana (PMFBY) has replaced the existing schemes of National Agricultural
Insurance Scheme (NAIS) & Modified National Agricultural Insurance
Scheme (MNAIS) with effect from Kharif 2016. Under the Prime Minister Fasal Bima Yojana (PMFBY), all
Seasonal Agricultural Operations (SAO) loans for notified crops in notified
areas are to be compulsorily provided insurance cover for all stages of the
crop cycle including post-harvest risks in specified instances2. Farmers’ details are required to be entered by banks
in the unified portal for crop insurance which is available at www.agri-insurance.gov.in in order to
facilitate assessment of coverage of crops insured, premiums deducted, etc.
4.5.2 While restructuring loans
in an area affected by a natural calamity, banks shall also take into
account the insurance proceeds, if any, receivable from an insurance
company. The insurance proceeds shall be adjusted towards the ‘restructured
accounts’ in cases where fresh loans have been granted to the borrower.
However, banks shall act with empathy and consider restructuring and
granting fresh loans without waiting for the receipt of the insurance claim
in cases where there is reasonable certainty of receiving the claim.
CHAPTER
V
PROVIDING
FRESH LOANS
5.1 Sanctioning of Fresh Loans
5.1.1 Once the decision to
reschedule loans is taken by SLBC/DCC, pending conversion of short-term
loans, banks shall grant fresh crop loan to the affected farmers based on
the scale of finance of the crop and the cultivation area as per the extant
guidelines3.
5.1.2 The bank assistance in
agriculture and allied activities (poultry, fishery, animal husbandry,
etc.) may also be needed for long term loans for a variety of purposes such
as repair of existing economic asset(s) and/or acquisition of new asset(s).
Similarly, rural artisans, self-employed persons, micro and small
industrial units, etc. in the areas affected by a natural calamity may
require fresh credit to sustain their livelihood. Banks shall assess the
need and decide on the quantum of loans to be granted to the affected
borrowers taking into consideration, amongst others, the credit requirement
and due procedure for sanctioning fresh loans.
5.1.3. Banks shall also grant
consumption loan up to ?. 10,000/- to existing borrowers without any
collateral. The limit may, however, be enhanced beyond ?. 10,000/- at the
bank’s discretion.
5.2 Terms and Conditions
5.2.1 Guarantee, Security and
Margin
5.2.1.1 Credit shall not be
denied for want of a personal guarantee alone. Where the bank’s existing
security has been eroded because of damage or destruction by floods,
assistance shall not be denied merely for want of additional fresh
security. The fresh loan shall be granted even if the value of security
(existing as well as the asset to be acquired from the new loan) is less
than the loan amount. For fresh loans, banks shall take a sympathetic view.
5.2.1.2 Where the crop loan
(which has been converted into term loan) was earlier sanctioned against
personal security/hypothecation of crop and the borrower is not able to
offer charge/mortgage of land as security for the converted loan, she/he
shall not be denied conversion facility merely on the ground of his/her
inability to furnish land as security. If the borrower has already availed
a term loan against mortgage/charge on land, the bank shall be content with
a second charge for the converted term loan. Banks shall not insist on
third party guarantee for providing conversion facility.
5.2.1.3 Where land is taken as
security, in the absence of original title record, a certificate issued by
the Revenue Department officials 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 may be accepted.
5.2.1.4 Margin requirements may
be waived or the grant/subsidy given by the concerned State Government
shall be considered for margin security.
5.3 Rate of Interest
5.3.1The rate of interest shall
be in accordance with the Master Directions - Reserve Bank of India (Interest
Rate on Loans and Advances) Directions. Within the area of their
discretion, however, banks shall take a sympathetic view of the
difficulties of the borrowers and extend a concessional treatment to
calamity-affected people. In respect of default in current dues, no penal
interest shall be charged. The banks shall also suitably defer the
compounding of interest charges. Banks shall not levy penal interest and
consider waiving penal interest, if any, already charged in regard to the
loans converted/rescheduled. Depending on the nature and severity of the
natural calamity, the SLBC/DCC shall take a view on the interest rate
concession that could be extended to borrowers so that there is uniformity
in approach among banks in providing relief.
5.3.2 As notified by the
Government of India4 from
time to time, to provide relief to farmers availing short term crop loans
and affected by a natural calamity, an interest subvention of 2 percent per
annum shall be made available to banks for the first year on the
restructured loan amount. Such restructured loans shall attract normal rate
of interest from the second year onwards.
CHAPTER
VI
OTHER
ANCILLARY MEASURES
6.1 Relaxation on Know Your
Customer (KYC) Norms
It needs to be recognized that
many persons displaced or adversely affected by a major calamity may not
have access to their identification and personal records. In such cases, a
basic saving bank deposit account on the basis of photograph along with
signature or thumb impression rendered in front of the bank official shall
be opened. The above instruction shall be applicable to cases where the
balance in the account does not exceed ? 50,000/- or the amount of relief
granted (if higher) or the total credit in the account does not exceed ?
1,00,000/- or the amount of relief granted, if higher in a year.
6.2 Providing access to Banking
Service
6.2.1 Banks may operate its
natural calamity affected branches from temporary premises under advice to
the concerned Regional Office of RBI. For continuing the temporary premise
beyond 30 days, banks may obtain specific approval from the concerned
Regional Office of RBI. Banks may also make arrangements to render banking
services in the affected areas by setting up satellite offices, extension
counters or mobile banking facilities etc. under intimation to RBI.
6.2.2 To meet the immediate cash
requirements of the affected people, due importance shall be given towards
restoring the ATMs or other alternate arrangements shall be provided to
avail such facilities.
6.2.3 Other measures that banks
may initiate at their discretion to alleviate the condition of the affected
people could be waiving of ATM fees, increasing ATM withdrawal limits;
waiving of fees towards overdraft/early withdrawal penalty on time
deposits/late fee for credit card/other loan instalment payments etc. and
giving option to credit card holders to convert their outstanding balance
to EMIs repayable in 1-2 years. Besides, all charges debited to the farm
loan account other than the regular interest may be waived considering the
hardship caused to the affected people.
CHAPTER
VII
RIOTS
AND DISTURBANCES: APPLICABILITY OF THE GUIDELINES
Applicability of the guidelines
in case of riots and disturbances
7.1 Whenever RBI advises the
banks to extend rehabilitation assistance to the riot/ disturbance affected
persons, the aforesaid guidelines shall broadly be followed by banks for
the purpose. It shall, however, be ensured that only genuine persons, duly
identified by the State Administration as having been affected by the riot/
disturbance are provided assistance as per the guidelines. In the event of large scale riots where most parts of
the State/Area are affected and the State Administration is not in a
position to identify the riot/disturbance affected persons and subject to
SLBC’s specific decision, the onus of identifying ‘genuine persons’ will
rest with banks.
7.2. The issuance of advice to
the banks by Reserve Bank of India on receipt of request/ information from
State Government and thereafter issue of instructions by banks to their
branches generally results in delay in extending the assistance to
riot-affected people. With a view to ensure quick relief to the affected
persons, it has been decided that the District Collector, on occurrence of
the riot/ disturbance, may ask the Lead Bank Officer to convene a meeting
of the DCC, if necessary and submit a report to the DCC on the extent of
damage caused to life and property in the area affected by the
riot/disturbance. If the DCC is satisfied that there has been extensive
loss to life and property on account of the riot/ disturbance, the relief
as per the above guidelines shall be extended to the people affected by the
riot/ disturbance. In cases where there is no District Consultative
Committee, the District Collector may request the convener of the State
Level Bankers’ Committee of the State to convene a meeting of the bankers
to consider extension of relief to the affected persons. The report
submitted by the District Collector and the decision thereon of SLBC/DCC
shall be recorded and shall form a part of the minutes of the meeting. A
copy of the proceedings of the meeting shall be forwarded to the concerned
Regional Office of the Reserve Bank of India.
CHAPTER
VIII
Natural
Calamities Portal: Monthly Reporting
8.1 The Reserve Bank of India
has developed a dedicated portal (https://dbie.rbi.org.in/DCP/)
for collection and compilation of data on natural calamities on a real time
basis through a centralized system. The portal provides facility for uploading
data files relating to relief measures extended by banks and notification
issued by State Government with regard to natural calamities.
8.2 Banks shall upload the
actual data on relief measures every month by the 10th of the following
month. In case there is no natural calamity and/or relief measures
extended, a ‘NIL’ statement shall be uploaded.
8.3 The SLBC Convener Bank shall
upload the notification(s) issued by State/District Authorities on
declaration of a natural calamity for which relief measures were
implemented by SLBC/banks.
Appendix
Master
Direction - Reserve Bank of India (Relief Measures by Banks in Areas
Affected by Natural Calamities) Directions, 2018:
List
of circulars consolidated for the Master Direction
Sr.
No.
|
Circular
No.
|
Date
|
Subject
|
1.
|
RPCD.No.PS.BC.6/PS.126-84
|
2.8.1984
|
Revised guidelines for relief
measures by banks in areas affected by natural calamities
|
2.
|
RPCD.No.PLFS.BC.38/PS.126-91/92
|
21.9.1991
|
Banks’ assistance to persons
affected by riots/ communal disturbances, etc.
|
3.
|
RPCD.No.PLFS.BC.59/05.04.02/92-93
|
6.1.1993
|
Guidelines for Relief Measures
by banks in areas affected by natural calamities-(Consumption Loans)
|
4.
|
RPCD.No.PLFS.BC.128/05.04.02/97-98
|
20.6.1998
|
Relief measures to persons
affected by natural calamities – Agricultural advances
|
5.
|
RPCD.PLFS.BC.No.42/05.02.02/2005-06
|
1.10.2005
|
The Advisory Committee on Flow
of credit to Agriculture and related activities from the Banking System
|
6.
|
FIDD
No.FSD.BC.12/05.10.001/2015-16
|
21.8.2015
|
Guidelines for Relief Measures
by Banks in Areas Affected by Natural Calamities
|
7.
|
FIDD
NO.FSD.BC.27/05.10.001/2015-16
|
30.06.2016
|
Guidelines for Relief Measures
by Banks in Areas Affected by Natural Calamities- Utilization of
Insurance Proceeds
|
8.
|
Master Direction
FIDD.CO.FSD.BC No.8/05.10.001/2017-18
|
03.07.2017
|
Master Direction – Reserve
Bank of India (Relief Measures by banks in areas affected by Natural
Calamities) Directions 2017
|
9.
|
FIDD.CO.FSD.BC.No.13/05.10.006/2017-18
|
03.08.2017
|
Natural Calamities Portal –
Monthly Reporting System.
|
1 Master
Circular-Prudential Norms on Income Recognition, Asset Classification and
Provisioning pertaining to Advances
2 Operational
guidelines – PMFBY issued by Ministry of Agriculture & Farmers’ Welfare
3 Master
Circular-Kisan Credit Card (KCC) Scheme
4 Subject to
inclusion in the Interest Subvention Scheme on short term crop loans
|