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Customer Awareness

Classification of Loan Account as SMA and NPA

The RBI circular DBR.No.BP.BC.45/21.04.048/2018-19 dated 7th June, 2019 on ‘Prudential Framework for Resolution of Stressed Asset’ requires KHFL to recognize incipient stress in borrower accounts, immediately on default, by classifying them as special mention accounts (SMA). It is clarified that the intervals are intended to be continuous and accordingly, the basis for classification of SMA categories shall be as follows:

Classifications as on day end Principal or interest payment or any other amount wholly or partly overdue i.e. pending  (Days Past Due Status)
SMA-0 1-30 days
SMA-1 31-60 days
SMA-2 61-90 days
NPA More than 90 days

Accordingly, the date of SMA/NPA shall reflect the asset classification status of the loan account, at the day-end of that calendar date. An example of such classification is as follows:

  • SMA 0 – If due date of a loan account is 31st March, 2021, and full dues are not received on this date, the account shall be SMA 0 on day end of 31st March, 2021.
  • SMA 1 – If the account continues to remain overdue, then this account shall get tagged as SMA-1 upon completion of 30 days of being continuously overdue i.e. 30th April, 2021.
  • SMA-2 – If the account continues to remain overdue, it shall get tagged as SMA-2 on 30th May, 2021
  • NPA – If the account continues to remain overdue further, it shall get classified as NPA on 29th June, 2021.

In the above context, it is further clarified that borrower accounts shall be flagged as overdue by KHFL as part of our day-end processes for the due date, irrespective of the time of running such processes.