Customer Awareness

Customer Awareness – Regarding Classiﬁcation of Loan Account as SMA and NPA

RBI circular no. RBI/2021-2022/125 DOR.STR.REC.68/21.04.048/2021-22 on ‘Prudential norms on Income Recognition, Asset Classification and Provisioning, pertaining to Advances – Clarifications dated Nov. 12, 2021

Clariﬁcation on Overdue: An amount is to be treated as overdue if it is not paid on the due date fixed by the Lender (before the Lender runs the day-end process for that day). Due Date is the date as specified in the Repayment Schedule on which the instalment is due to be

B. Classiﬁcation as Special Mention Account (SMA) and Non-Performing Asset (NPA)

The below Illustration covers the concepts of date of overdue, classification as Special Mention Account (“SMA”) and Non- Performing Asset (NPA), up gradation of loan account etc. Loans other than revolving facilities			Loans in the nature of revolving facilities like 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		Up to 30 days			—
SMA-1	More than 30 days and up to 60 days			SMA-1		More than 30 days and up to 60 days
SMA-2	More than 60 days up to 90 days			SMA-2		More than 60 days up to 90 days
NPA	More than 90 days			NPA		More than 90 days

Accordingly, the date of SMA/NPA shall reﬂect the asset classification status of an account at the day-end of that calendar date. An illustration of such classification is given below:

Classiﬁcation as:	Scenario I	Scenario II
Original Due Date	5 October 2023	2 October 2023
SMA O	5 October 2023 end of day	2 October 2023 end of day
SMA 1	5 November 2023 end of day	2 November 2023 end of day
SMA 2	4 December 2023 end of day	1 December 2023 end of day

NPA 4 Jan 2024 end of day 1 Jan 2024 end of day

C. Upgradation of accounts classiﬁed as NPAs

Customer classified as NPAs may be upgraded as ‘standard’ only if entire arrears of interest and principal are paid by the customer. With regard to up gradation of accounts classified as NPA due to restructuring, non- achievement of date of commencement of commercial operations (DCCO), etc., the instructions as specified for such cases shall continue to be applicable.

For e.g. if a customer is classified as NPA on 4 Jan 2024 with an overdue of Rs. 50,000/-, the customer will be upgraded to standard only after receipt of full overdue amount.