 "Manipur violence: What are RBI's riot relief measures invoked by the state?")
The Manipur government has declared that riots and violence in the state have impacted the economic activities and livelihood of a majority of the general public. As a relief measure, the government has decided to invoke the Reserve Bank of India's (RBI's) riot relief measures in the state.
So far, the guidelines have been mostly used in the areas impacted by natural calamities and not under difficult law and order situations.
Manipur has been in the grip of ethnic violence between Meitei and Kuki communities. Over 100 people have been killed, and over 50,000 have been displaced since it erupted on May 3. Curfew has been imposed in several districts, and the internet remains suspended in the state.
The state government's order said that Chapter VII of the "Reserve Bank of India (Relief Measures by Banks in Areas Affected by Natural Calamities) Directions, 2018", related to "Riots and Disturbances", applies to the state.
What are RBI's riot relief measures?
Chapter VII of the directions says, "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."
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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 principal amount of the short-term loan, as well as interest due for repayment in the year of occurrence of the natural calamity (or riots), may be converted into a term loan," they say.
Crop loans
For crop loans, if the loss is between 33 per cent and 50 per cent, a maximum repayment period of up to two years should be allowed. If the crop loss is 50 per cent or more, the repayment period may be extended up to a maximum of five years.
Also, in all restructured loan accounts, a moratorium period of at least one year should be considered. Banks should also not insist on additional collateral security for such restructured loans.
Long-term agri loans
In these loans, the existing term loan instalments should be rescheduled according to the repaying capacity of the borrower and the nature of the riots.
If only the crop for the year is damaged and productive assets are not damaged, the banks may reschedule the payment of instalments during the year of natural calamity or violence and extend the loan period by one year. The banks may also postpone the payment of interest by borrowers.
On the other hand, if the productive assets are also damaged, it may lead to a need for a new loan.
Other loans
In all other loans, the state-level banking committee (SLBC) and district consultative committee (DCC) must specify which loans need to be restructured. Based on that and the extent of loss, the loans will be restructured by individual banks.
Fresh loans
The issuance of fresh loans will also be taken based on the decision of SLBC or DCC. The directions state, "For fresh loans, a sympathetic view will have to be taken".
The banks will assess the need and decide on the quantum of loans to be granted to the affected borrowers taking into consideration, amongst others, their credit requirement and the due procedure for sanctioning loans.
The banks will also grant consumption loans up to Rs 10,000 to existing borrowers without any collateral.
Moreover, credit "should not be denied for want of personal guarantees", and a fresh loan will be granted even if the value of security, existing as well as the asset to be acquired from the new loan, is less than the loan amount.
Relaxation of KYC norms
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.
Access to banking facilities
The RBI has also asked the banks to make arrangements to render banking services in the affected areas by setting up satellite offices, extension counters or mobile banking facilities.
Additionally, to meet the immediate cash requirement of the affected people, "due importance" is to be given towards restoring the ATMs or other alternate arrangements.