Quick answerRBI directs banks to raise consumption loan limits to Rs 5,000 (branch manager can go up to Rs 10,000) without collateral for flood-hit Maharashtra borrowers, and to expedite restoration of banking services.
What changed
RBI issued a circular on July 29, 2005, allowing banks to increase the general consumption loan limit from Rs 1,000 to Rs 5,000 without collateral for eligible persons in flood-affected areas of Maharashtra, with branch managers permitted to enhance it further to Rs 10,000 based on repayment capacity. Banks were also asked to consider financial assistance for repairs/reconstruction of dwelling units and for small road transport operators affected by the calamity.
What it means for you
Banks can now offer higher unsecured consumption loans to flood victims, easing immediate liquidity stress. This increases credit risk slightly but aligns with RBI's disaster relief framework; lenders must assess repayment capacity for amounts above Rs 5,000. The directive also pushes banks to restore branch operations quickly, which may require logistical and staffing adjustments.
What you must do
Immediately communicate the enhanced consumption loan limits (Rs 5,000 standard, up to Rs 10,000 with branch manager discretion) to all branches in flood-affected Maharashtra areas.
Assess and process applications for dwelling unit repairs/reconstruction and small road transport operator assistance, ensuring viability checks.
Expedite restoration of banking services in affected areas, including temporary arrangements if needed.
Coordinate with the SLBC convenor bank to align relief measures with state-level assessments.
Who it affects
Scheduled commercial banks operating in Maharashtra, Branch managers in flood-affected areas, Borrowers (artisans, self-employed, traders, tiny and small scale industrial units, small road transport operators) in affected regions
Regulatory timeline
Decoded by BankPulse2026-06-19 20:16 IST
Status change: withdrawn09 Jul 2026, 04:03 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the maximum consumption loan amount without collateral under this circular?
The standard limit is Rs 5,000 without collateral, but branch managers can increase it to Rs 10,000 based on the borrower's repayment capacity.
Does this circular apply only to Maharashtra?
Yes, it specifically addresses the unprecedented rains and floods in Maharashtra, though similar principles may apply to other states under the master circular.
Are banks required to restore services immediately?
RBI has requested banks to take necessary action expeditiously to restore banking services in affected areas, though no specific deadline is given.
📜 Read the original circular — full text as issued by RBI
RBI/2005-06/82
RPCD. PLFS. BC. No. 23/05.04.02/ 2005-06
July 29, 2005
The Chairman/Managing Director/Chief Executive
Officer
All scheduled commercial banks
Dear Sir,
Guidelines for relief measures by banks
in areas affected by unprecedented rains and floods in Maharashtra
As you are aware, the State of Maharashtra has
been affected by unprecedented rains and floods, resulting in heavy damage to
life and property. The convenor bank of the State Level Bankers’ Committee (SLBC)
of the state has been advised to assess the situation and take immediate measures
to provide appropriate relief to the affected people in terms of our standing
guidelines,vide our Master
Circular RPCD.No.PS.BC.6 /05.04.02-2005-06 dated July 1,2005 . In particular,
we draw attention of banks to paragraph 26 to 30 of the said circular regarding
financial assistance to artisan, self-employed, traders, tiny and small scale
industrial units affected by the unprecedented calamity.
2. In terms of paragraph 25 of the above circular,
banks may extend general consumption loans upto Rs.1000 to eligible persons
in the areas affected by natural calamity in the states where the state governments
have constituted risk funds for such lendings by commercial banks. In view of
the situation prevailing in the state of Maharashtra, banks may consider increasing
the limit of consumption loan to be provided to the affected persons in the
state upto Rs. 5,000 without any collateral. This limit may be enhanced to Rs.10,000
at the discretion of the branch manager, depending on the repaying capacity
of the borrower.
3. Banks may also consider provision of financial
assistance for the purpose of repairs/reconstruction of dwelling units and also
to small road transport operators including taxi, auto rickshaw operators affected
by the calamity, keeping in view the viability of the proposals.
4. Banks are, therefore, requested to take immediate
action in this regard and advise their controlling offices/ branches to provide
appropriate relief to the affected persons.
5. Banks are also requested to take necessary
action to expeditiously restore banking services in the affected areas.
6. Please acknowledge receipt.
Yours faithfully,
( G. Srinivasan )
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2005-06/82 · issued 29 Jul 2005. The plain-English explanation above is BankPulse’s own independent summary.
Test yourself
Quick self-check built only from the facts already on this page — tap a question to reveal the answer.
Q1. In one line, what does this circular do?
RBI directs banks to raise consumption loan limits to Rs 5,000 (branch manager can go up to Rs 10,000) without collateral for flood-hit Maharashtra borrowers, and to expedite restoration of banking services.
Q2. Who does this circular apply to?
Scheduled commercial banks operating in Maharashtra, Branch managers in flood-affected areas, Borrowers (artisans, self-employed, traders, tiny and small scale industrial units, small road transport operators) in affected regions
Q3. What is the first thing you should do about it?
Immediately communicate the enhanced consumption loan limits (Rs 5,000 standard, up to Rs 10,000 with branch manager discretion) to all branches in flood-affected Maharashtra areas.
Related circulars · Financial Inclusion & Priority Sector
Immediately communicate the enhanced consumption loan limits (Rs 5,000 standard, up to Rs 10,000 with branch manager discretion) to all branches in flood-affected Maharashtra areas.
💻 IT / Systems
Assess and process applications for dwelling unit repairs/reconstruction and small road transport operator assistance, ensuring viability checks.
📜 Compliance
Expedite restoration of banking services in affected areas, including temporary arrangements if needed.
Coordinate with the SLBC convenor bank to align relief measures with state-level assessments.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Branch Manager at a bank this circular applies to (Scheduled commercial banks operating in Maharashtra, Branch managers in flood-affected areas, Borrowers (artisans, self-employed, traders, tiny and small scale industrial units, small road transport operators) in affected regions), your first concrete step on “RBI Flood Relief: Higher Consumption Loans for Maharashtra” is: “Immediately communicate the enhanced consumption loan limits (Rs 5,000 standard, up to Rs 10,000 with branch manager discretion) to all branches in flood-affected Maharashtra areas.” (RBI issued this 29 Jul 2005).
Action required: Immediately communicate the enhanced consumption loan limits (Rs 5,000 standard, up to Rs 10,000 with branch manager discretion) to all branches in flood-affected Maharashtra areas.
Action required: Assess and process applications for dwelling unit repairs/reconstruction and small road transport operator assistance, ensuring viability checks.
Action required: Expedite restoration of banking services in affected areas, including temporary arrangements if needed.
Action required: Coordinate with the SLBC convenor bank to align relief measures with state-level assessments.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
AI-drafted · AI fact-check pending · under the editorial review of our expert review panel · decoded & published by BankPulse · 21 Jun 2026, 08:38 IST
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=2400&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert review panel. Independent platform, not affiliated with the Reserve Bank of India; never reproduces RBI text verbatim.
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