25 June 2011
Suppose in a term loan account the borrower has overdue interest & principal amount for 2 months & in 3rd month he just pays a part portion of interest overdue in 1st month. Whether he will be classified as NPA after 90 days if he does not pay his principal & interest amount for 3rd month also & if yes then can you give me reference to a circular. Thanks in advance
26 June 2011
The whole idea is that the account should not be dead. If it is rolling and some money is credited in the account then it is not to be treated as NPA but if it is Term Loan you have defaulted in due installments then the auditor may treat this as NPA
26 June 2011
Thank you Sir, can u give me a reference to the circular bcoz the bank people generally dont agree in Concurrent Audits to treat the account as NPA as they are scared of losing their good relation with the borrower.
26 June 2011
There is no circular but the statutory auditor has the power to change the classification which the bank may or may not agree. For Concurrent Audits treat of the account as NPA is different. In this case if any amount has been deposited they do not treat the same as NPA because the account is alive and there are transaction within 90 days.
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