Riot Provision Of The Reserve Bank Of India : Manipur
The Manipur government has invoked the Riot Provision of the Reserve Bank of India (RBI) in response to a Grave Situation in the State marked by riots and violence.
- The order acknowledged the borrowers’ inability to repay loans due to the crisis and sought relief measures for the affected individuals.
- While typically applied in areas affected by natural calamities, this move marks the first instance of its utilization in response to a law-and-order situation.
RBI Directions 2018:
- The Provisions are as per Chapter No. 7 of the “Reserve Bank of India (Relief Measures by Banks in Areas Affected by Natural Calamities) Directions, 2018.”
- Whenever RBI advises the banks to extend rehabilitation assistance to the riot/disturbance affected persons, the aforesaid guidelines may broadly be followed by banks for the purpose.
- The Provisions specifically addresses “Riots and Disturbances”.
- The rules specify several norms that must be followed for Restructuring the Loans, providing fresh loans and other measures, including KYC norms.
- According to the directions, all the short-term loans, except those overdue at the time of the occurrence of riots, will be eligible for restructuring.
- The provisions of these Directions shall apply to every Scheduled Commercial Bank (including Small Finance Banks (SFBs) and excluding Regional Rural Banks (RRBs) licensed to operate in India by RBI.
- In the case of crop loans, if the loss ranges between 33% and 50%, borrowers are eligible for a maximum repayment period of two years. If the crop loss exceeds 50%, the repayment period can be extended up to a maximum of five years.
- Additionally, all restructured loan accounts will have a moratorium period of at least one year.
- If the crop is damaged without harm to productive assets, banks can reschedule installment payments for the affected year and extend the loan period by one year.
- Additionally, banks have the option to postpone interest payments by borrowers. However, if productive assets are also damaged, a new loan may be required.
- Banks will evaluate borrowers’ credit needs, follow loan approval procedures, and may offer collateral-free consumption loans up to Rs 10,000 to existing borrowers without personal guarantees, even if the value of assets is lower than the loan amount.
- For the people who have lost their documents due to the calamity of riots, the banks need to open new accounts for such people.
- This will be applicable where the balance in the account does not exceed Rs 50,000. The total credit in the account should not exceed Rs 1,00,000.
