Non-Performing Assets

1. Classification as Special Mention Account (SMA)

SMA is an account which is exhibiting signs of incipient stress resulting in the borrower defaulting in timely servicing of her debt obligations, though the account has not yet been classified as NPA.

SMA Sub[1]categories Basis for classification Principal or interest payment or any other amount wholly or partially overdue for Term Loans:

SMA-0 Up to 30 days

SMA-1 More than 30 days and up to 60 days

SMA-2 More than 60 days and up to 90 days

In case of revolving credit facilities like cash credit, the SMA sub-categories will be as follows:

SMA Sub[1]categories Basis for classification Outstanding balance remains continuously in excess of the sanctioned limit or drawing power, whichever is lower, for a period of

SMA-1 More than 30 days and up to 60 days

SMA-2 More than 60 days and up to 90 days

(ii) The above-mentioned instructions on classification of borrower accounts into SMA categories are applicable for all loans, including retail loans, other than agricultural advances governed by crop season[1]based asset classification norms, irrespective of size of exposure.

1. Classification of Assets as Non-Performing (NPA)

A non-performing asset will be a loan or an advance where:

1. Interest and / or instalment of principal remain overdue for a period of more than 90 days in respect of a Term Loan.
2. The account remains ‘Out of order’ for a period of more than 90 days, in respect of an Overdraft / Cash Credit (OD/CC).
3. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
4. Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts. Any amount due to the bank under any credit facility, if not paid by the due date fixed by the bank becomes overdue. “An account will be treated as ‘out of order’ if the outstanding balance remains continuously in excess of the sanctioned limit / drawing power. In cases where the outstanding balance in the principal operating account is less than the sanctioned limit / drawing power, but there are no credits continuously for 90 days or credits are not enough to cover the interest debited during the same period, these accounts will be treated as ‘out of order’
5. Drawings in the working capital accounts are covered by the adequacy of current assets, since current assets are first appropriated in times of distress. Considering the practical difficulties of large borrowers, stock statements relied upon by the banks for determining drawing power will not be older than three months. The outstanding in the account based on drawing power calculated from stock statements older than three months would be deemed as irregular. A working capital borrowal account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days.
6. An account where the regular / ad-hoc credit limits have not been reviewed or have not been renewed within 90 days from the due date / date of ad-hoc sanction will be treated as NPA.