Reserve Bank of India vide its Notification No. RBI/2024-25/100, DOR.STR.REC.54/21.04.048/2024-25 dated December 31, 2024 issued Government Debt Relief Schemes (DRS).

Debt Relief Schemes (DRS) refer to Schemes notified by the State Governments that entail funding by the fiscal authorities to cover debt obligations of a targeted segment of borrowers that the lending institutions are required to sacrifice/waive.

Applicability: – It is applicable to Commercial Banks (including Regional Rural Banks and Local Area Banks, Primary (Urban) Co-operative Banks, State Cooperative Banks & Central Cooperative Banks, Non-Banking Financial Companies (including Housing Finance Companies) and All-India Financial Institutions.

The guidelines shall apply in respect of DRS notified on or after the date of issue of this guideline and shall be without prejudice to the extant guidelines on resolution of stressed assets applicable to the respective Regulated Entities.

Compliances to be followed by Regulated Entities:-

1. To comply with the guidelines contained in Annex-1 of the Scheme as stated below that lay down certain broad principles in this regard in case REs participating as lenders under DRS.
2. To follow up at earliest for settlement of dues pending receipt from Government for more than 90 days in case of relief measures announced prior to these guidelines.
3. To obtain approval of its Board prior to participation in Debt Relief Schemes (DRS).
4. To ensure borrowers to be selected as per terms of schemes.
5. To communicate terms and conditions and prudential aspects of Schemes at time of obtaining consent from borrower.
6. To treat waiver of accrued but unrealised interest and/ or principal as compromise settlement.
7. To extinguish borrowers debt obligations on receipt of fund covering entire outstanding dues of borrower.
8. To evaluate changes/modifications to terms and conditions of original loan contract in case fund received not adequate to cover entire outstanding dues of borrower.
9. To extend fresh credit exposure to borrowers covered under Debt Relief Schemes (DRS) as per their internal policy.
10. To continue to apply prudential norms including prudential norms on income recognition, asset classification and provisioning on borrower till receipt of funds.
11. To pursue recovery measures as per their Board approved policy in case of non-performing accounts of borrowers.

Intimation compliances to be followed by Regulated Entities:-

1. To intimate authority provision of scheme warranting modification in long term interest of borrowers through State Level Bankers Committee (SLBC)/ District level Consultative Committee (DCC) during design of Debt Relief Schemes.
2. To intimate credit information companies (CIC) of borrowers under Debt Relief Schemes (DRS).

Annexure 1 Guidelines to be followed by Regulated Entities:-

1. To obtain approval of its Board prior to participation in Debt Relief Schemes (DRS).
2. To intimate authority provision of scheme warranting modification in long term interest of borrowers through State Level Bankers Committee (SLBC)/ District level Consultative Committee (DCC).
3. To determine outstanding dues to be crystallised in case of borrowers to be covered under Debt Relief Schemes (DRS) including interest.
4. To ensure borrowers to be selected as per terms of schemes.
5. To communicate terms and conditions and prudential aspects of Schemes at time of obtaining consent from borrower.
6. To treat waiver of accrued but unrealised interest and/ or principal as compromise settlement.
7. To extinguish borrowers debt obligations on receipt of fund covering entire outstanding dues of borrower.
8. To evaluate changes/modifications to terms and conditions of original loan contract in case fund received not adequate to cover entire outstanding dues of borrower.
9. To extend fresh credit exposure to borrowers covered under Debt Relief Schemes (DRS) as per their internal policy.
10. To intimate credit information companies (CIC) of borrowers under Debt Relief Schemes (DRS).
11. To continue to apply prudential norms including prudential norms on income recognition, asset classification and provisioning on borrower till receipt of funds.
12. To pursue recovery measures as per their Board approved policy in case of non-performing accounts of borrowers.

Details of this Guideline is available on the RBI website at https://website.rbi.org.in vide Notification No. RBI/2024-25/100, DOR.STR.REC.54/21.04.048/2024-25 dated December 31, 2024.

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