In a big relief for borrowers, the Reserve Bank of India (RBI) has introduced new rules to help people during natural disasters. Now, banks can offer loan relief automatically if an area is hit by events like floods, earthquakes, or cyclones.
This new rule will come into effect from July 1 and is expected to benefit millions of borrowers across the country.
No Need to Apply for Relief
Earlier, customers had to visit banks and submit applications to get relief on loan payments. The bank would then review each case before taking action.
Under the new system, this process becomes much easier. If a region is officially declared disaster-affected, banks will directly identify eligible customers and provide relief on loan installments.
This means borrowers won’t have to deal with long paperwork or delays during already stressful times.
Relief to Start Within 45 Days
The RBI has made it clear that once a disaster is officially recognized, banks must begin the relief process within 45 days.
Disasters will be identified based on standards set by the State Disaster Response Fund (SDRF) or the National Disaster Response Fund (NDRF).
This step is important because people often face sudden income loss during disasters, making it difficult to repay loans on time.
Option to Opt Out Available
If a borrower does not want to take this relief, they can choose to opt out. For this, they will need to inform the bank within 135 days.
This ensures flexibility for customers who may not need assistance.
Only Active Loan Accounts Will Qualify
Not all borrowers will be eligible for this benefit.
The RBI has clarified that only “standard accounts” — meaning active loan accounts — will qualify. Also, loan payments should not be overdue by more than 30 days.
Accounts with long pending dues or defaults will not be covered under this scheme.
New Rules Apply Only to Future Loans
Another important point is that these rules will apply only to new loans issued after the policy comes into effect.
Existing or older loans will continue under the current rules. This helps banks avoid confusion while implementing the new system.
Types of Relief Borrowers Can Get
Under the new rules, banks can offer different kinds of support to affected borrowers. These may include:
Extra time to pay EMIs
Temporary pause on installments
Loan restructuring options
