The Reserve Bank of India (RBI) on Wednesday further eased the prudential norms for classifying a loan account as non-performing asset (NPA) in respect of small borrowers.
In its notification, the RBI said on reviewing its November 21 order, it has been decided to provide additional 30 days – taking the total to 90 days – before a loan account could be classified as NPA.
The new norm is applicable for (a) Running working capital accounts, crop loans, where the sanctioned loan is Rs.1 crore or less; (b) Term loans for business purposes, secured or otherwise, where the original sanctioned amount was Rs.1 crore or less by any bank, NBFC, including NBFC-Micro Finance Institution (NBFC-MFI).
According to RBI, the above includes agriculture loans and the new norms will apply to dues payable between November 1, 2016 and December 31, 2016.
The central bank also permitted the entities regulated by it to defer the downgrade of the above categories of loan accounts that was standard as on November 1, 2016, but would have become NPA for any reason during the period November 1, 2016 to December 31, 2016, by 90 days from the date of such downgrade.
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 non-performing asset (NPA).
Loan dues payable after January 1, 2017 will be covered by the extant instructions for the respective categories of lenders, the RBI said.