Interest Subvention Facilities Considered for Natural Calamity-Affected Borrowers, Says CM Thakur Sukhvinder Singh Sukhu

Shimla, September 1, 2023

In a significant move to provide financial relief to borrowers impacted by natural calamities, the State Level Bankers Committee (SLBC), in consultation with the RBI, is set to explore the possibility of interest subvention facilities. Chief Minister Thakur Sukhvinder Singh Sukhu announced this initiative, which aims to support affected individuals and businesses in their recovery efforts following devastating natural disasters.

The decision to restructure loans comes in response to the hardships faced by borrowers in areas ravaged by unprecedented monsoon rains, which triggered flash floods and landslides, severely affecting economic stability.

Following the declaration of the State as a naturally affected area on August 18, 2023, consultations with banks led to the finalization of these crucial measures. This comprehensive initiative includes the rescheduling of various existing loans, encompassing Micro, Small, and Medium Enterprises (MSMEs), retail, and other sectors, except for advances related to agriculture and allied activities. Relief measures for agricultural loans will be provided after a thorough assessment of crop losses by the State Government, in accordance with the RBI circular.

To determine eligibility for relief measures, accounts that were not overdue as of June 24, 2023, will qualify for loan restructuring. The entire restructuring process will be completed within three months from the date of the State Government’s declaration of the natural calamity on August 18, 2023.

For eligible borrowers, a moratorium period will be implemented, allowing the deferment of principal installment payments for up to 12 months from the date of implementing the need-based restructuring measures, assessed on a case-by-case basis. This relief effort extends to all regulated entities of the Reserve Bank of India (RBI), including Scheduled Commercial Banks, Regional Rural Banks, Cooperative Banks (both rural and urban), and Small Finance Banks.

This initiative reflects the State Government’s commitment to assisting those affected by natural calamities in rebuilding their lives and businesses, providing them with the financial support needed for recovery.