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On April 29, 2026, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026, amending the 2025 Directions to establish a harmonised framework for resolving exposures affected by natural calamities and external events such as riots or disturbances. The amendment introduces a new Chapter VI-A establishing a dedicated resolution mechanism for borrower accounts impacted by calamities declared by Central or State Governments. The framework designates State Level Bankers' Committees (SLBCs), Union Territory Level Bankers' Committees (UTLBCs), and District Consultative Committees (DCCs) as coordinating bodies to assess calamity impact and recommend relief measures within 15 days of declaration. Eligible borrowers are those with Standard-classified accounts not in default for more than 30 days as of the calamity date. Banks may implement resolution plans including payment rescheduling, conversion of accrued interest into credit facilities, and sanction of additional finance, subject to viability assessment. The framework permits banks to invoke resolution suo moto without awaiting formal borrower requests, though borrowers retain the option to opt out until 135 days from calamity declaration. Resolution must be invoked within 45 days and implemented within 135 days of calamity declaration, with provision for one-time 30-day extension in exceptional cases. The amendment also addresses ancillary measures including consideration of insurance proceeds, Government interest subvention benefits, and acceptance of alternative documentation for agricultural loans in areas governed by the Sixth Schedule of the Constitution. Banks must report relief measures half-yearly on the RBI's CIMS portal by September 30 and March 31. The amendments come into force on July 1, 2026. Consequential amendments to Credit Risk Management, Income Recognition Asset Classification and Provisioning, and Responsible Business Conduct Directions were issued simultaneously.

The Reserve Bank of India (RBI) has released the Reserve Bank of India (Commercial Banks – Resolution of Stressed Assets) Second Amendment Directions, 2026. The directions prescribe: Definitions and board policies including introducing definitions for the date of invocation and natural calamity, and mandating that a bank incorporate provisions for resolution into its board-approved policy, outlining objective principles for relief, verifiable parameters, and a delegation matrix for timely implementation. Committee roles and calamity scope stipulating that chapter VI-A governs resolutions for borrowers impacted by declared natural calamities or economic disturbances, and requiring the state level bankers' committee (SLBC), union territory level bankers' committee (UTLBC), or district consultative committee (DCC) to convene special meetings within 15 days of a declaration to assess severity, formulate criteria, and publicize decisions. Eligibility and implementation timelines requiring that eligible borrowers' accounts must be classified as standard and not in default for more than 30 days on the calamity occurrence date, and mandating that resolution must be invoked no later than 45 days and implemented within 135 days from the calamity declaration date, while allowing for suo moto invocation with a borrower opt-out and a potential 30-day extension for invocation in exceptional cases. Resolution plans and ancillary measures outlining that resolution plans may include rescheduling payments, converting accrued interest, or sanctioning additional finance based on viability assessments, and allowing banks to factor in insurance proceeds, government interest subventions, and alternative land ownership certificates for agricultural loans. Reporting requirements mandating that the SLBC or UTLBC convenor bank upload calamity declarations to the CIMS portal within 15 days, and requiring banks to upload data on relief measures half-yearly or submit a 'NIL' statement if no measures are extended. The amendments will come into force with effect from July 1, 2026.

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India's Reserve Bank Issues Second Amendment Directions on Commercial Bank Resolution of Calamity-Affected Stressed Assets

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Reserve Bank of India Issues Second Amendment Directions on Commercial Bank Resolution of Calamity-Affected Stressed Assets