Nbfc provision

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 April 2012 CLASSIFICATION OF ASSETS

STANDARD
FOR NPA PROVISION
FOR SUB STANDARD PROVISION THE STANDARD LOAN SHOULD BE OVERDUE FOR SIX MONTHS AND REMAIN 18 MONTHS

EXAMPLE:
(CONDITION : FROM SEPTMEBER 2010 ONWARDS NO EMI RECIVED)
IF THE LOAN BECOMES NPA IN SEPT 2010 AND IN MARCH 2011(BECAUSE AS PER NORMS 6 MONTHS OVERDUE) CLASSIFIED AS SUB STANDARD AND IN MARCH 2012 WHETHER ITS COMES UNDER SUB STANDARD OR DOUBTFUL(BECAUSE IT IS 6 + 12 MONTHS) = 18 MONTHS

WHETHER ITS SUB STANDARD OR DOUBTFUL IN 2012
ANSWER ITS URGENT

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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21 April 2012 RBI Regulations for NBFCs –
Amendment to NBFC Directions on Prudential Norms
We invite your attention to the Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998
contained in Notification No. DFC.119/DG(SPT)-98 dated January 31, 1998 (as amended upto April 22, 2002).
2. Removal of the concept of ‘Past Due’ –
Amendment to the definition of ‘non-performing asset’
(1) In terms of paragraph 2 (2) of the Circular DNBS.PD CC. No. 19/02.01/2001-02 dated April 22, 2002, it was
advised that
(a) the concept of ‘past due’ has been done away with from the definition of ‘non-performing asset’ (NPA)
effective from March 31, 2003; and
(b) the half yearly return on prudential norms as also the balance sheet as on March 31, 2003 should accordingly reflect the compliance therewith.
(2) Accordingly, the definition of NPA in paragraph 2(1)(xii) of the NBFC Prudential Norms Directions shall stand
amended. The comparative chart of the existing and the revised definition of NPA is given hereunder:
RBI Notifications
190
“non-performing asset” (referred to in these directions
as “NPA”) means :
“with effect from March 31, 2003, `non-performing
asset (referred to in these directions as “NPA”) means :
Present Definition Revised Definition
w. e. f. 31.3.2003
(a) an asset, in respect of which, interest has remained
past due for six months;
(a) an asset, in respect of which, interest has remained
overdue for a period of six months or more;
(ba) a demand or call loan, which remained overdue for
six months from the date of demand or call or on which
interest amount remained past due for a period of six
months;
(c) a demand or call loan, which remained overdue for
a period of six months or more from the date of
demand or call or on which interest amount remained
overdue for a period of six