| Notification Detail :
RBI/2024-25/100
DOR.STR.REC.54/21.04.048/2024-25
December 31, 2024
All Commercial Banks (including Regional Rural Banks and Local Area Banks)
All Primary (Urban) Co-operative Banks
All State Cooperative Banks & Central Cooperative Banks
All Non-Banking Financial Companies (including Housing Finance Companies)
All All-India Financial Institutions
Madam/Dear Sir,
Government Debt Relief Schemes (DRS)
The Prudential Framework for Resolution of Stressed Assets dated June 7, 2019, read with the Framework for Compromise Settlements and Technical Write-offs dated June 08, 2023, provides a principle-based resolution framework to the regulated entities (REs) for addressing any stress in borrower accounts. Further, specific frameworks have been provided for REs to restructure exposures affected by natural calamities viz. the Master Direction - Reserve Bank of India (Relief Measures by Banks in Areas affected by Natural Calamities) Directions, 2018-SCBs dated October 17, 2018; Master Direction – Reserve Bank of India (Relief Measures by Banks in Areas affected by Natural Calamities) Directions 2018 – RRBs dated October 17, 2018; Guidelines for Relief Measures by NBFCs in areas affected by Natural Calamities dated July 28, 2016; and Master Circular - Management of Advances – UCBs dated July 25, 2023.
2. Some of the REs may also be involved in implementation of various forms of Debt Relief Schemes (DRS) announced by State Governments that inter alia entail sacrifice/waiver of debt obligations of a targeted segment of borrowers, against fiscal support. If such schemes are announced frequently, incommensurately, or without due consideration to the principles of financial discipline, they would negatively affect credit discipline and in the long run, may be counter-productive to the credit flow to such borrowers. Apart from the broader implications for the credit discipline and moral hazard issues, DRS also raises certain prudential concerns, which include delay in receipt of dues; mismatch between the claims admitted / submitted by the REs and accepted by the concerned Government as per the terms of the scheme; mandatory requirement of fresh credit by the REs, etc.
3. As such, the REs participating as lenders under such DRS shall comply with the guidelines contained in Annex-1, that lay down certain broad principles in this regard. The guidelines shall apply in respect of DRS notified on or after the date of issue of this guideline and shall be without prejudice to the extant guidelines on resolution of stressed assets applicable to the respective REs.
4. In this context, a model operating procedure (MOP) has also been shared with the State Governments (Annex-2) for their consideration while designing and implementing such DRS through a consultative approach, to avoid any non-alignment of expectations of the stakeholders involved, including the Government, lenders, borrowers, etc.
5. In respect of relief measures announced prior to the introduction of these guidelines, any dues pending receipt from Government, for more than 90 days shall attract specific provision of 100%. REs shall take necessary action and actively follow up with the respective Governments for settlement of such dues at the earliest.
Yours faithfully,
(Vaibhav Chaturvedi)
Chief General Manager
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