Key highlights of the NPA norms as notified by RBI
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Customer Education Literature on NPA
As per RBI’s notification on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Clarifications (‘RBI Circular’) dated November 12, 2021 norms of NPA has been revised.
Key Highlights Of Revised NPA Norms To Be Followed By Company Is Hereunder
The timelines for Special Mention Account (SMA) categorisation have been modified, the overdue timeline for SMA 0, SMA 1 and SMA 2 shall be upto 30, more than 30 upto 60 and more than 60 upto 90 days as referred below.
The Classification of borrower accounts as Special Mention Account (SMA) as well as Non-Performing Asset (NPA) shall be done as part of the day-end process for the relevant date. The SMA or NPA classification date shall be the calendar date for which the day end process is run. The said SMA classification of borrower accounts are applicable to loans granted by Company.
As per circular DBR.No.BP.BC.45/21.04.048/2018-19 dated June 7, 2019 by RBI on ‘Prudential Framework for Resolution of Stressed Assets’, lenders will recognise incipient stress in borrower accounts, immediately on default, by classifying them as special mention accounts (SMA).
The SMA categories shall be as follows:
| Overdue | Classification |
|---|---|
| For a period upto 30 days | SMA - 0 |
| For a period more than 30 days and upto 60 days | SMA - 1 |
| For a period more than 60 days and upto 90 days | SMA - 2 |
| For a period more than 90 days | NPA* |
* Upgradation of accounts classified as NPAs
Loan account once classified as NPA can be upgraded as standard only after entire arrears of principal, interest and any other amount are paid by the borrower.
Illustration For Classification Of Borrowers Account As SMA/NPA For Easy Reference
If Due date of a Loan account repayment is March 31, 202X, then indicative SMA/NPA classification shall be as follows:
It indicates whether you have been consistent in your repayments and if you have missed any, how many instalments you have missed and by how many days. The counting of DPD will be considered based on the oldest payment due date and the number of days falling due shall be counted to classify the loan account as NPA. In case the due date and billing date are different, the former would be considered for the purpose of calculating the DPD (days past due).
Upgradation Of Accounts Classified As NPAs
The loan accounts classified as NPAs may be upgraded as ‘standard’ assets only if entire arrears of interest and principal are paid by the borrower. Partial payment, such as payment of only interest or only one installment, shall not result in the upgradation of the loan account. Once a loan account is classified as an NPA, it shall remain as such till the time the entire outstanding amount is repaid.
Further In case of borrowers having more than one credit facility, loan accounts shall be upgraded from NPA to standard asset category only upon repayment of entire arrears of interest and principal pertaining to all the credit facilities.
Company should place consumer education literature on its websites, explaining with examples, the concepts of date of overdue, SMA and NPA classification and upgradation, with specific reference to day-end process. It shall also consider displaying such consumer education literature in its place of business by means of posters and/or other appropriate media.
GRO Details
Name
Raktim Addya
Contact
mPokket Financial Services Private Limited, PS Srijan Corporate Park, Unit 1204, Sector V, Kolkata - 700 091
Email
[email protected]
PNO Details
Name
Sumanta Mukherjee
Contact
mPokket Financial Services Private Limited, PS Srijan Corporate Park, Unit 1204, Sector V, Kolkata - 700 091
Email
[email protected]; +91 76050 57586
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