NBFCs get relief regarding classification of NPAs, deadline for implementation of guidelines extended

The Reserve Bank had found that some banks are putting the NPA account in the category of normal account after receiving interest on the account and some amount on the principal amount. After that, strict instructions were issued on NPAs.

Relief to NBFCs regarding classification of NPAs

reserve Bank of India ,RBI) on Tuesday took the stranded debt (NPAFor all banks including NBFCs (Non-Banking Financial Companies), some relief has been given in the rules issued in November last year. Under this, the deadline for implementing the guidelines regarding conversion of NPA ie non-performing asset or bad loan account into normal account has been extended to September, 2022. But for this it is necessary that all the dues of the concerned bank (Banks) have been found. Earlier, in the circular issued on November 12, 2021, RBI had fixed December 31, 2021 as the deadline to implement all the stringent rules.

Deadline extended till September

After considering the request received from NBFCs, the central bank issued a revised circular on Tuesday. According to it, “The new circular does not in any way interfere with the guidelines on Indian Accounting Standards to be implemented by NBFCs…. Loan accounts maintained under NPAs can be upgraded to the category of normal accounts, But for this it is necessary that the entire outstanding balance including interest and principal amount should be returned to the borrower. NBFCs have a deadline till September 30, 2022 to implement this provision.

Why were the rules strict

With regard to income recognition, asset classification and provisioning for loans, RBI’s circular dated November 12, 2021 was an improvement over its circular issued on October 1, 2021. Under this, the apex bank had prohibited all banks from keeping the NPA account in the category of normal account only on payment of interest. In fact, the Reserve Bank had found that some banks are putting the interest on the NPA account and some amount on the principal amount in the category of normal account. Thereafter the said instruction was issued. The revised circular also states that the definition of ‘out of order’ as clarified in the circular dated November, 2021 will be applicable to all loans offered as overdraft facility. In the new circular, it has also been made mandatory for all banks that they will give separate information about the actual date of the loan and principal amount and interest and others in the loan agreements. They simply will not tell what was the date of repayment of the loan. At the end of last year, the Reserve Bank had said that if the economy is adversely affected by the new form of corona virus, Omicron, then the gross NPA (non-performing assets) ie bad loans of banks will increase to 8.1-9.5 percent by September 2022. could reach. It was 6.9 percent in September 2021.

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