Classification of Assets as Non-Performing (NPA):

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

(i) Interest and / or installment of principal remain overdue for a period of more than 90 days in respect of a Term Loan.

(ii) The account remains ‘out of order’ , in respect of an Overdraft / Cash Credit (OD/CC) and all other loan products being offered as an overdraft facility, including those not meant for business purposes and/or which entail interest repayments as the only credits.

(iii) The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted.

(iv) In the case of direct agricultural advances, the overdue norm is specified as under:

a) A loan granted for short duration crops ( which are not long duration ) will be treated as NPA, if the installment of principal or interest thereon remains overdue for two crop seasons.

b) A loan granted for long duration crops (crops with crop season longer than one year ) will be treated as NPA, if the installment of principal or interest thereon remains overdue for one crop season.

(v) Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.

(vi) In addition, an account may also be classified as NPA in terms of certain specific provisions of the Master Circular of RBI.

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. As early recognition of such accounts enables banks to initiate timely remedial actions to prevent their potential slippages into NPAs, all UCBs shall classify loans/advances accounts as SMA, as under:

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