**Policy Summary: Loans to Victims Affected by Natural Calamities**
This document summarizes the Indian government's policy regarding financial assistance to individuals affected by natural calamities, as articulated in Lok Sabha Unstarred Question No. 3492, answered on August 11, 2025, by the Minister of State in the Ministry of Finance, Shri Pankaj Chaudhary.
The Reserve Bank of India (RBI) initially issued guidelines in 1984 for banks to provide relief measures in areas affected by natural disasters such as floods, droughts, and cyclones. These guidelines were expanded in 1989 to include fishermen. In response to the severe sea earthquake in December 2004 (Tsunami), the RBI further enhanced the amount of consumption loans for general purposes.
On October 17, 2018, the RBI consolidated its instructions on relief measures by banks in areas affected by natural calamities. These consolidated guidelines include provisions for restructuring existing loans without downgrading asset classification and sanctioning fresh loans. The guidelines recognize cyclone, drought, earthquake, fire, flood, tsunami, hailstorm, landslide, avalanche, cloudburst, pest attack, and cold wave/frost as natural calamities.
From March 2020 to June 2025, approximately 7.84 lakh loan accounts were restructured/rescheduled, and approximately 13.60 lakh fresh loan applications were sanctioned for individuals affected by natural calamities across various states, as reported by the RBI.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for issuing guidelines to banks regarding relief measures for victims of natural calamities.
SHRI ARUN KUMAR SAGAR: Member of LOK SABHA who posed the unstarred question about loans to victims affected by natural calamities.
SHRI PANKAJ CHAUDHARY: The Minister of State in the Ministry of Finance who answered the question regarding loans to victims affected by natural calamities.
Tsunami: A natural calamity that occurred in December 2004, leading to enhanced loan amounts for affected people.
Ministry of Finance: The government ministry responsible for financial matters, including overseeing relief measures related to natural calamities.
RBI Guidelines 1984: Guidelines issued by the Reserve Bank of India in 1984 for banks to extend relief measures in areas affected by natural calamities, later revised in 1989 and consolidated in 2018.
30 December 2004 RBI Circular: A circular issued by the Reserve Bank of India enhancing the amount of consumption loan for general purposes for people affected by the Tsunami.
17 October 2018 RBI Guidelines: Consolidated instructions of RBI on relief measures by banks in areas affected by natural calamities, providing for restructuring of loans and sanctioning of fresh loans.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF FINANCIAL SERVICES
LOK SABHA
UNSTARRED QUESTION NO. 3492
ANSWERED ON MONDAY, AUGUST 11, 2025/ SRAVANA 20, 1947 (SAKA)
LOANS TO VICTIMS AFFECTED BY NATURAL CALAMITIES
†3492. SHRI ARUN KUMAR SAGAR:
Will the Minister of FINANCE be pleased to state:
(a) whether the general guidelines issued by Reserve Bank of India in 1984 were revised in
1989 with a view to widening the scope of assistance/loans to be provided by banks to the
victims of floods, cyclones, landslides, riots etc.;
(b) if so, the number of persons to whom the assistance has been provided in the affected
States till date;
(c) whether any fresh instructions have been issued to financial institutions in the affected
States to provide further financial assistance to the persons affected by the severe sea
earthquake in December, 2004; and
(d) if so, the details thereof?
ANSWER
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (d): RBI had issued Guidelines in 1984 for Banks to extend relief measures in the
areas affected by Natural Calamities viz., floods, droughts, cyclones etc. The scope of the
said guidelines was extended to fishermen in 1989. Further, RBI vide its circular dated 30
December 2004 enhanced the amount of consumption loan for general purposes for people
affected by the Tsunami.
The instructions of RBI on relief measures by banks in areas affected by natural calamities
were consolidated and issued on 17 October 2018 which inter-alia provides restructuring of
loans without downgrade in asset classification and sanctioning of fresh loans. Under the
said consolidated guidelines cyclone, drought, earthquake, fire, flood, tsunami, hailstorm,
landslide, avalanche, cloudburst, pest attack, and cold wave/frost have been recognized as
natural calamities.
As reported by RBI, about 7.84 lakh loan accounts were restructured/rescheduled and
approx. 13.60 lakh fresh loan applications were sanctioned for the people affected with
natural calamity in different states during March 2020 to June 2025.
***