The Reserve Bank of India (RBI) has activated its relief package for the districts affected by severe floods in Bihar. At the instance of the RBI, an emergency meeting of the controlling heads of banks was convened on August 28, 2008 in Patna to invoke the RBI relief package.
Under the RBI package, bank branches are required to initiate the package of measures immediately after the district/state authorities declare the district/state as calamity affected area and to provide financial assistance to the agriculturists, small scale industrial units, artisans, small businesses and trading establishments affected by natural calamities.
The measures include consumption loans to persons affected by calamities for sustenance, waiver of margin requirements or considering as margin the grants, subsidies provided by state governments, provision of credit not only to existing borrowers but also to other eligible persons within the jurisdiction of the bank branch and who are not covered by any other financial intermediary as also conversion and rescheduling/restructuring of existing loans in the case of crop failure due to natural calamities.
While extending financial assistance, banks may provide consumption loans up to Rs 10,000 or higher as the banks may decide, which could be used by those affected for food, shelter material, etc, extend timely fresh financial assistance to resume productive activities not only to the existing borrowers, but also to other eligible borrowers; and depending on the severity of the calamity and its recurrence, extend the period of repayment of restructured term loans ranging from 7 to 10 years with one year of moratorium.
The package also includes providing to affected persons, term loans for developmental purposes.