Small
Borrowers Allowed 60 more Days to Pay Up
· More Breaching space to NBFCs before Debts Turn
NPAs
[Ref: RBI/2016-17/143 -
DBR.No.BP.BC.37/21.04.048/2016-17 dated November 21, 2016]
Subject: Prudential Norms on Income Recognition,
Asset Classification and Provisioning pertaining to
Advances
It has been represented to us that consequent upon
withdrawal of the legal tender status of the existing Rs.500 and Rs.1,000 notes (SBN) small borrowers may need some more time to
repay their loan dues. Taking these representations into consideration, it has
been decided to provide an additional 60 days beyond what is applicable for the
concerned regulated entity(RE) for recognition of a
loan account as substandard in the following cases:
(i) Running working capital accounts (OD/CC)/crop
loans, with any bank, the sanctioned limit whereof is ‘ 1
crore or less;
(ii) Term
loans, whether business or personal, secured or otherwise, the original
sanctioned amount whereof is ‘ 1 crore or less, on the
books of any bank or any NBFC, including NBFC (MFI). This shall include housing
loans and agriculture loans.
Note: The limits at (i)
and (ii) above are mutually exclusive limits applicable to respective category of loans.
(iii) Loans
sanctioned by banks to NBFC (MFI), NBFCs, Housing Finance Companies, and PACs
and by State Cooperative Banks to DCCBs.
(iv) The above
guidelines will also be applicable to loans extended by DCCBs.
2. The above dispensation will be subject to
following conditions:
(i) It applies to dues payable between November 1,
2016 and December 31, 2016. REs shall note to ensure that this is a short-term
deferment of classification as substandard due to delay in payment of dues
arising during the period specified above and does not result in restructuring
of the loans.
(ii) Dues
payable before November 1 and after December 31, 2016, will be covered by the
extant instruction for the respective regulated entity with regard to
recognition of NPAs.
(iii) The
additional time given shall only apply to defer the classification of an
existing standard asset as substandard and not for delaying the migration of an
account across sub-categories of NPA.
3. All REs, including DCCBs, are advised to be
guided by the above instructions.