Rate for the provision of npa

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Querist : Anonymous

Querist : Anonymous (Querist)

06 November 2014 what are the rate for calculating the provision for non performing assets in NBFC, hire purchase Financing etc

Querist : Anonymous

Querist : Anonymous (Querist)

06 November 2014 what are the rate for calculating the provision for non performing assets in NBFC, hire purchase Financing etc

Aashok Kumar Sharma online

Aashok Kumar Sharma online

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19 July 2025 Provisioning Rates for NPAs in NBFCs and Hire Purchase Financing
Non-Performing Assets (NPAs) are loans or advances where repayments are overdue for a specified period.

1. General Provisioning Norms (As per RBI guidelines and typical practice around 2014):

Asset Category Provisioning Rate (%)
Standard Assets 0.40% to 1% (General Provision)
Sub-Standard Assets At least 15%
Doubtful Assets (up to 1 year) At least 25%
Doubtful Assets (1 to 3 years) At least 40%
Doubtful Assets (more than 3 years) At least 100%
Loss Assets 100% (Fully provided)
2. For Hire Purchase and Lease Financing:

Hire Purchase/Lease finance companies follow similar provisioning guidelines as NBFCs.
Provisioning is based on the asset classification:
Standard assets: 0.25% to 1%
Sub-standard: 15%
Doubtful: 25% to 100%, depending on duration
Loss: 100%
Additional Notes:
NBFCs must follow RBI's Master Direction on Prudential Norms on Income Recognition, Asset Classification and Provisioning.
Provisioning must be done in the books to cover expected losses from NPAs.
Exact percentages can vary slightly based on RBI circulars and company policy, but the above rates are typical.

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