STANDARD FOR NPA PROVISION FOR SUB STANDARD PROVISION THE STANDARD LOAN SHOULD BE OVERDUE FOR SIX MONTHS AND REMAIN 18 MONTHS
EXAMPLE: (CONDITION : FROM SEPTMEBER 2010 ONWARDS NO EMI RECIVED) IF THE LOAN BECOMES NPA IN SEPT 2010 AND IN MARCH 2011(BECAUSE AS PER NORMS 6 MONTHS OVERDUE) CLASSIFIED AS SUB STANDARD AND IN MARCH 2012 WHETHER ITS COMES UNDER SUB STANDARD OR DOUBTFUL(BECAUSE IT IS 6 + 12 MONTHS) = 18 MONTHS
WHETHER ITS SUB STANDARD OR DOUBTFUL IN 2012 ANSWER ITS URGENT
20 April 2012
For NPA provision, an asset on which interest and/ or instalment of principal remain overdue for a period of more than 90 days is treated as NPA.
So sub standard provision for the standard loan should be overdue for six months is not valid. RBI circular says (Banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter)
Further RBI circular says that
With effect from March 31, 2005, an asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months. A loan classified as doubtful has all the weaknesses inherent in assets that were classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, – on the basis of currently known facts, conditions and values – highly questionable and improbable.
However, in the case mentioned above it is definitely doubtful
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