CAIIB-ABM-MOD-D-Asset Classification and Provisioning Norms

Asset Classification and Provisioning Norms

• Banks should classify an account as NPA only if the interest charged during any quarter is not serviced fully within 90 days from the end of the quarter

• An account should be treated as 'out of order' if the outstanding balance remains continuously in excess of the sanctioned limit/drawing power In cases where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing power, but there are no credits continuously for 90 days as on the date of Balance Sheet or credits are not enough to cover the interest debited during the same period, these accounts should be treated as 'out of order'.

• Any amount due to the bank under any credit facility is 'overdue' if it is not paid on the due date fixed by the bank.

• Interest on advances against term deposits, NSCs, IVPs, KVPs and life policies may be taken to income account on the due date, provided adequate margin is available in the accounts.

• A substandard asset would be one, which has remained NPA for a period less than or equal to 12 months. a substandard asset would be one, which has remained NPA for a period less than or equal to 12 months.

• If arrears of interest and principal are paid by the borrower in the case of loan accounts classified as NPAs, the account should no longer be treated as nonperforming and may be classified as 'standard' accounts.
  
  
• Advances against Term Deposits, NSCs, KVP/IVP, etc, need not be treated as NPAs. Advances against gold ornaments, Government securities and all other securities are not covered by this exemption.

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