Reserve Bank of India provides business continuity instructions to banks

The Reserve Bank of India has issued guidelines to all scheduled banks in the country, informing them of the business continuity measures that must be in place to ensure quick restoration of banking services in areas affected by natural calamities. The guidelines were issued as a follow-up to recent recommendations made by an Internal Working Group set up by the Reserve Bank.

The Reserve Bank says that banks have a duty to provide customers with uninterrupted access to bank accounts and must facilitate the opening of new accounts by persons affected by natural disasters; especially so that people can quickly receive relief and aid given by the Indian government and other agencies.

The business continuity guidelines also cover measures to be taken by banks to ensure continuity of other services; such as cheque clearing services and the supply of cash.

According to the new guidelines, in areas where the bank branches are affected by a natural disaster and are unable to function normally, banks are authorised to operate from temporary premises. Banks may also ensure the continuation of banking services by setting up satellite offices, extension counters or mobile banking facilities. Further, to satisfy customer’s immediate cash requirements, banks could consider waiving the penalties for accessing accounts, such as, fixed deposits.

Restoring ATM functionality, or making alternate arrangements for providing such facilities, should be a high priority and banks may consider putting in place arrangements for allowing their customers to access other ATM networks, mobile ATMs, etc.

In emergency situations banks may provide loans of up to Rs. 10,000 to existing customers, without collateral; may extend timely fresh financial assistance to resume productive activities not only to existing borrowers, but also to other eligible borrowers; and, depending on the severity of the disaster, may extend the period of repayment of restructured term loans, with a one year payment moratorium.

In the context of ongoing disasters caused by floods in three States - Gujarat, Andhra Pradesh and Maharashtra - the Reserve Bank has asked the convenors of the State Level Bankers' Committee (SLBC) to hold special SLBC meetings immediately and take stock of the measures required to provide relief to those affected.

•Date: 11th August 2006• Region: Asia •Type: Article •Topic: Financial sector
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