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Npa provision

Aditi Dosi (CA Final Student) (105 Points)

04 June 2014

My query is if bank have given loan to purchase car for rs. 6,00,000 on 15 /12 /12 but the borrower have income frm agriculture and there are 5 instalment of rs. 1,20,000 excluding interest a6nd amount is overdue on 31.12 13 for 1,39,000 and only 96,000 are only recovered till 31.3.14 then account will be NPA?? If yes then why? and if no then why? please answer as soon as possible its urgent.Thanking u in advance

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CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 05 June 2014

Interest and/or installment of principal remain overdue for a period of more than 90 days in respect of a term ,loan
The account remains ‘out of order’ for a period of more than 90 days, in respect of an Overdraft/Cash Credit (OD/CC),
The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
Interest and/or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and
Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.
Non submission of Stock Statements for 3 Continuous Quarters in case of Cash Credit Facility.
No active transactions in the account (Cash Credit/Over Draft/EPC/PCFC) for more than 90 days
The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted,
Interest and/or installment of principal remains overdue for two harvest seasons but for a period not exceeding two half years in the case of an advance granted for agricultural purposes, and
Any amount to be received remains overdue for a period of more than 90 days in respect of other accounts.
Non submission of Stock Statements for 3 Continuous Quarters in case of Cash Credit Facility.
No active transactions in the account (Cash Credit/Over Draft/EPC/PCFC) for more than 90 days

So As per ur qustion loan was taken for purchase of Car on 31.12.2012 and payments was due on 31.3.2013. was of Rs.139000/- there may ineterpretation

1. installment was being paid but not by the full amount of installment i.e 1.2 Lacs or

2. The due amount is for instrest.

3. there is quarterly installment payments where due amount is inlcuding interest is of rs. 139000.00

For NPA

1. No NPA shall be classified bcs partment is being made out of due amount.

2. Still not be classified as NPA bcs ..the term on 90 days does not completed on 31.3.2013....Due persion shall be counted from 1.2.2013 in case of monthlyu installment or in case of quaterly installment it shall be counted from 1.4.2013.

3. the account shall be NPA on 30.6.2013. and amount so recovered shall be recognised as income either from on account of Interest or installment.