What changed
The RBI has inserted a new paragraph (12A) into the Credit Risk Management directions. This paragraph explicitly instructs banks to factor in the potential impact of calamities on borrowers during credit assessments. The amendment becomes operative from July 1 2026.
What it means for you
Banks will need to adjust their credit appraisal frameworks to account for calamity-related risks as per the new paragraph 12A.
What you must do
- Review and update credit assessment policies to include calamity impact considerations.
- Train credit risk teams on new guidelines and risk modelling.
- Integrate calamity risk factors into credit scoring and provisioning models.
- Ensure compliance with the amendment by the July 1 2026 deadline.
Who it affects
Commercial banks, Credit risk managers, Loan officers, Risk analytics teams
What qualifies as a calamity?
The RBI does not provide a strict definition in the amendment; banks are expected to interpret based on events that may impact borrowers.
How should banks incorporate calamity impact?
By factoring the possible impact of calamities into credit assessments as per paragraph 12A.
When does the amendment take effect?
From July 1 2026.