Consumer Education – classification of Borrower Accounts as SMA/NPA

The bank recognizes incipient stress in borrower accounts by classifying them as Special Mention Account (SMA)/Non-Performing Asset (NPA) as per the norms given below:

Special Mention Account (SMA)*

Special mention accounts shall be classified as per following categories:

Loans in the nature of Term Loans

Loans in the nature of cash credit/overdraft

SMA sub-categories

Basis for classification-Principal or interest payment
or any other amount wholly or partly overdue

SMA sub-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-0

Upto 30 days

SMA-0

Upto 30 days

SMA-1

More than 30 days and upto 60 days

SMA-1

More than 30 days and upto 60 days

SMA-2

More than 60 days and upto 90 days

SMA-2

More than 60 days and upto 90 days

Non-Performing Asset (NPA)

A non-performing asset (NPA) is a loan or an advance where:

*Agricultural advances governed by crop season-based asset classification shall be exempt from this instruction. ^Any amount due to the bank under any credit facility is overdue, if it is not paid on the due date fixed by the bank.

Out Of Order Status:

Cash credit/Overdraft (CC/OD) account is classified as NPA if it is ‘out of order’. An account should be treated as ‘out of order’ if:

NPA classification on account of non-renewal of CC/OD limits:

An account where the regular/adhoc credit limits have not been reviewed/renewed within 180 days from the due date/date of adhoc sanction will be treated as NPA.

NPA classification on non-submission of stock statements:

In working capital borrowal account, Bank relies upon stock statements not older than three months for determination of drawing power. The outstanding in the account based on drawing power calculated from stock statements older than three months, would be deemed as irregular. Account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower’s financial position is satisfactory.

NPA classification of credit card accounts

A credit card account will be treated as non-performing asset if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the payment due date mentioned in the statement.

Example of SMA/NPA

For detailed guidelines in asset classification and provisioning, please refer to RBI’s Master Circular – Prudential Norms on Income Recognition, Asset classification and Provisioning pertaining to Advances dated October 1, 2021 and Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Clarifications dated November 12, 2021. The above asset/SMA classification norms are subject to changes as per regulatory instructions issued from time to time

For Specific Queries customers may please contact the assigned branch.

Last Updated on: 06-06-2023 11:46:00 AM

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