New Delhi: India’s monsoon has unleashed one of the worst disasters in recent times, with floods, landslides, and cloudbursts claiming hundreds of lives and crippling livelihoods across states. From Punjab to Assam, families have seen homes washed away, crops destroyed, and income sources vanish overnight.

Unprecedented destruction is seen in multiple regions. Himachal Pradesh has reported over 300 deaths and thousands of homes destroyed; Assam’s floods have affected more than six lakh people across 21 districts; Maharashtra has seen farmland on an unprecedented scale submerged; while Jammu and Kashmir, Punjab, and Uttarakhand have faced devastating floods and landslides, washed-out highways, and lost harvests.

Over 100 civil society organisations and individuals submitted an appeal to the Reserve Bank of India (RBI), scheduled commercial banks, non-banking financial companies (NBFCs), and microfinance institutions (MFIs) to adopt immediate, climate-sensitive banking measures. The appeal noted, “Repayment is impossible when homes are washed away, fields buried under silt, and breadwinners have lost work or even their lives. Forcing repayments in such conditions is unjust and contrary to the spirit of financial inclusion.”

The signatories include Medha Patkar of Narmada Bachao Andolan, Shaktiman Ghosh of National Hawkers Federation, Thomas Franco, former General Secretary of All India Bank Officers Confederation and environmentalists Soumya Dutta, Ravi Chopra, Disha Ravi, Ashish Kothari, and collectives such as Himdhara Collective, Friends of the Earth India, National Alliance for Peoples’ Movements, All India Women Hawkers Federation and Centre for Financial Accountability.

Proposed steps include automatic moratoriums on loan repayments in affected areas without penal charges, restructuring of loans to prevent borrowers from being classified as defaulters, outright waivers for households whose earning members or assets have been wiped out, and strict regulation and penalties for loan agents’ predatory tactics.

New lines of credit were also called for as vital for rebuilding. With documents and collateral often destroyed in floods and landslides, campaigners demand simplified processes, concessional rates, and partial credit guarantees to help families reconstruct homes, farms and small businesses. Furthermore, the process must be streamlined and transparent, with communication helplines to be set up by lenders for direct access by affected families.

This is not the first appeal of its kind - After the Wayanad landslides, Kerala Bank announced targeted waivers following community demands. Advocates argue a similar nationwide framework is needed now, backed by clear RBI guidelines for disaster-linked moratoriums and restructuring.

“Not routine credit risk"

“For families that have lost homes, fields, or breadwinners, repayment is simply inhuman,” the appeal stated. “This is not routine credit risk—it is a climate-driven financial emergency.”

Advocates argue that insisting on loan recovery now would trap thousands in cycles of debt and financial and social exclusion. They are urging the RBI and other lenders to step in with immediate and comprehensive relief for victims.

The crisis has renewed calls for banks to align with the realities of climate change and create systemic reform, lest we risk vulnerable citizens falling further into debt traps. “Only then can our financial system claim to be aligned with the realities of a warming world and the rights of its most affected citizens,” the appeal concluded. Unless lenders act swiftly, India risks compounding a climate disaster with a crippling debt disaster.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.