RBI Proposes Flexibility for Banks in Calamity Resolution Plans

The Reserve Bank of India proposed new guidelines granting regulated entities like banks full discretion over resolution plans during natural disasters. The proposal aims to streamline current norms and ensure timely relief by allowing flexible frameworks. Public comments are invited until February 17, 2023.

The Reserve Bank of India has unveiled draft guidelines granting regulated entities, including banks and NBFCs, autonomy in designing resolution plans during natural calamities.

Announced in 2023, the guidelines aim to harmonize existing prudential norms across entities affected by such disasters. Stakeholders have until February 17 to submit feedback on the draft Directions.

The guidelines emphasize a principle-based regime to ensure timely relief measures. Banks must follow a dedicated window for invoking a resolution framework and maintain a separate window for implementing the plan. Exposures restructured under this scheme will retain 'Standard' classification with lower provisioning requirements.

(With inputs from agencies.)