RBI’s riot provisions to aid borrowers

RBI’s riot provisions to aid borrowers


According to the Manipur administration, riots and other acts of violence have affected the entire State, having an adverse effect on people’s ability to conduct business and maintain their way of life.

Role Of RBI in Riots and Natural Calamities

  • Natural calamities like droughts, floods, and cyclones cause significant damage to human life and economic pursuits.
  •  Rehabilitation efforts are crucial, and commercial banks and co-operative banks play a developmental role in reviving economic activities. Banks must have a blueprint of action to provide relief and assistance quickly and efficiently. 
  • These instructions should be available to State Government authorities and District Collectors, ensuring clear communication among all parties involved.
  •  Commercial banks’ credit assistance details will depend on the situation, operational capabilities, and borrowers’ needs. 
  • Guidelines are recommended to enable uniform and concerted action, particularly for agriculturists, small-scale industrial units, artisans, small businesses, and trading establishments affected by natural calamities.

How was this implemented in Manipur?

  • The State government has used a Reserve Bank of India (RBI) provision that is rarely used to grant relief to the impacted people and companies.
  • The clause relates to loan restructuring and rescheduling, which is frequently used in places hit by natural disasters. This is a unique way to put the law and order provision to use.
  • On June 21, Manipur’s Chief Secretary, Vineet Joshi, issued an order indicating that various Deputy Commissioners had reported damage to citizens’ homes and places of business as a result of the ongoing law and order crisis.
  • Given the current situation, borrowers who have taken out loans are unable to repay them, and they have asked the State Level Bankers’ Committee (SLBC) for assistance.
  • The SLBC’s discussion of the matter on June 9 shows that the pertinent authorities have thought about and evaluated it.
  • Manipur is mentioned as being subject to Chapter No. 7 of the Reserve Bank of India’s “Relief Measures by Banks in Areas Affected by Natural Calamities) Directions, 2018” in the order made by the Chief Secretary.
  • By citing this chapter, the governor of Manipur says that rioting and violence have spread throughout the entire state and are having an influence on both the economy and people’s quality of life.