Summary of this article
RBI proposed draft norms for resolution plan natural calamities
Norms for banks and NBFCs exposure due to natural calamities
The Reserve Bank on Tuesday proposed providing complete discretion to regulated entities (RE), including banks and NBFCs, with respect to the design and implementation of a resolution plan during natural calamities.
In 2023, the Reserve Bank announced to issue guidelines rationalising the extant prudential norms for implementation of resolution plans in respect of exposures affected by natural calamities, inter alia, harmonising the regulatory instructions applicable to different regulated entities (REs).
Based on a comprehensive review of the existing regulatory instructions, including the scope, coverage and prudential requirements, the RBI on Tuesday issued draft Directions for different types of REs for public comments till February 17.
"The guidelines envisage a principle-based resolution regime, providing complete discretion to the RE with respect to design and implementation of the resolution plan, inter alia, taking into consideration the decisions of the State Level Bankers’ Committee (SLBC) / District Consultative Committee (DCC)," the RBI said.
To ensure timely implementation of relief measures, a dedicated window has been prescribed for invocation of the resolution framework, along with a separate window for implementation of the Resolution Plan (RP), post invocation, it said while issuing the draft Directions.
Further, exposures restructured as part of relief measures shall continue to be classified as 'Standard' with income recognition on an accrual basis, with reduced additional specific provisioning vis-à-vis other restructured exposures, the draft Directions said.
It also proposes that REs will make alternate arrangements for providing banking services in the areas affected by natural calamities.
