The Reserve Bank of India (“RBI”) on November 12, 2021 issued clarifications with respect to the master circular on ‘Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated October 1, 2021’ (“Clarifications”).
Few of the clarifications issued under the Clarifications are as follows:
Loans other than revolving facilities |
Loans in the nature of revolving facilities like cash credit/overdraft |
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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 |
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-- |
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 |
Note: In case of NBFCs, the Clarifications has stated that the references to 90 days for SMA-2/NPA classification shall be read as per the applicable norms and also subject to the provisions of the circular DOR.CRE.REC.No.60/03.10.001/2021-22 dated October 22, 2021 on ‘Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs’.
Please find a copy of the Clarifications here.
This update has been contributed by Nidhi Arya (Partner) and Avin Sarkar (Associate).
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