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RBI/2021-22/117 DOR.No.STR.REC.64/21.04.048/2021-22 November 1, 2021 The Chief Executive Officers All Primary (Urban) Co-operative Banks Madam / Dear Sir, Master Circular- Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs Please refer to ourMaster Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 1, 2015on the captioned subject. The enclosedMaster Circularconsolidates and updates all the instructions / guidelines on the subject
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FAQ :
The circular aims to ensure that a bank's balance sheet accurately reflects its financial health by establishing objective criteria for income recognition and asset classification, moving away from subjective assessments.
An asset becomes non-performing when it ceases to generate income. Specifically, it's a loan or advance where interest and/or principal are overdue for more than 90 days, or the account is 'out of order' for overdraft/cash credit facilities, or bills remain overdue for over 90 days.
Yes, for direct agricultural advances, a loan for short-duration crops is an NPA if overdue for two crop seasons, and for long-duration crops, it's overdue for one crop season. Other agricultural loans follow the 90-day norm.
A Special Mention Account (SMA) is an account showing early signs of stress where the borrower is defaulting on debt obligations, but it hasn't yet been classified as an NPA. This allows banks to take timely action.
UCBs with total assets of ₹2000 crore or above as of March 31, 2020, were required to implement it from June 30, 2021. For those with assets between ₹1000 crore and ₹2000 crore (and meeting certain cyber security criteria), it was from September 30, 2021.
Restructured accounts classified as standard assets are immediately re-classified as 'sub-standard'. NPAs, upon restructuring, may slip into lower asset classification categories. Upgradation to 'standard' is possible after a 'satisfactory performance' period.
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Source : https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12185&Mode=0