In a collaborative effort aimed at mitigating the financial distress faced by borrowers affected by natural calamities, the Reserve Bank of India (RBI) and the State Government have united to explore the possibility of interest subvention facilities. This initiative comes as a beacon of hope for those grappling with the devastating aftermath of unprecedented monsoon rains, which triggered flash floods and landslides in various parts of the state.
Chief Minister Sukhvinder Singh Sukhu announced this significant partnership, emphasizing its potential to provide essential financial relief to borrowers who have endured the hardships of nature’s fury.
The decision to explore interest subvention facilities for calamity-affected borrowers follows a series of consultations between state authorities and banking institutions, led by the State Level Bankers Committee (SLBC). These discussions culminated in a comprehensive plan to provide relief measures, including loan restructuring, to borrowers from various sectors.
One of the key aspects of this plan is the rescheduling of all types of existing loans, including those obtained by Micro, Small and Medium Enterprises (MSMEs), retail customers and other individuals and businesses. However, it’s important to note that loans related to agriculture and allied activities are excluded from this initial phase of relief.
To determine eligibility for these relief measures, borrowers must have accounts that were not overdue as of June 24, 2023. This ensures that those who were financially stable before the calamity struck are considered for loan restructuring. The restructuring process is expected to be completed within three months from the date of the State Government’s declaration of the natural calamity, which was August 18, 2023.
For eligible borrowers, a moratorium period will be implemented, allowing them to defer principal instalment payments for up to 12 months from the date of implementing the need-based restructuring measures. This deferral will be assessed on a case-by-case basis, considering the unique circumstances of each borrower.
The relief effort encompasses all regulated entities under the Reserve Bank of India, including Scheduled Commercial Banks, Regional Rural Banks, Cooperative Banks (both rural and urban), and Small Finance Banks. This inclusive approach ensures that a wide range of borrowers affected by the calamity can benefit from the financial support measures.
The collaborative effort between the RBI and the State Government to explore interest subvention facilities represents a significant step forward in assisting individuals and businesses affected by natural disasters. As consultations progress and eligibility criteria are finalized, affected borrowers can look forward to much-needed relief in their efforts to rebuild and restore normalcy in their lives and businesses.
