Kamal Ghorui
Mumbai: RBI has introduced a new ‘calamity chapter’ in its guidelines, creating a dedicated framework for disaster-related relief that separates such measures from general restructuring and tightens eligibility, accounting, and provisioning norms.Unlike in the past when relief measures were handled under broader restructuring frameworks, the new rules establish a distinct Chapter VI-A for natural calamities and similar disruptions. A key change is the introduction of a strict eligibility filter that limits relief to borrowers who were standard and not in default for more than 30 days at the time of the calamity. This 30-day default rule creates a clear boundary to ensure that only sound accounts benefit and prevents misuse of relief measures to mask pre-existing stress.The framework also allows banks to implement relief measures on a suo moto basis after recommendations from relevant banking committees, removing the earlier requirement for borrowers to initiate restructuring requests. Borrowers retain the option to opt out, but the change is expected to speed up the delivery of relief. Another shift lies in income recognition norms. Banks are now permitted to continue recognising income on an accrual basis for these restructured accounts, in contrast to earlier practices where such accounts often moved to cash-based recognition, affecting reported earnings.The guidelines also introduce a specific provisioning requirement of 5% for such accounts, creating a clearer and more standardised prudential buffer. Earlier frameworks relied on more general provisioning norms without a fixed requirement for calamity-linked restructuring.
