RAJADHANI CO-OP URBAN BANK LTD, BARKATPURA, HYDERABAD

CUSTOMER EDUCATION LITERATURE ON SMA,  NPA  CLASSIFICATION  AND  UPGRADATION

Introduction

The Reserve Bank of India (RBI) Master Circular - Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs, dated April 01, 2025.

Objective

With a view to increasing awareness among borrowers of RAJADHANI CO-OP URBAN BANK LTD, this document covers the concept of SMA, NPA & related provisions for ease of understanding.

The examples quoted herein are indicative and relate to general scenarios and are not exhaustive in nature. The guidelines issued & amended by RBI from time to time shall prevail for implementation.

What is the meaning of Overdue account?

An account is classified as “Overdue” if any amount due to RAJADHANI CO-OP URBAN BANK LTD is not paid on the due date fixed by the RAJADHANI CO-OP URBAN BANK LTD & agreed by borrower as per the loan agreement. The amount may refer to principal or interest or any other amount due (whether wholly or partly due).

The date of classifying a loan account as “Overdue” shall be the date on which the amount was due but not paid by the borrower.

What is days past due (DPD)?

It is the number of days for which your account has remained in overdue stats.

For example, if on the due date, full dues are not received by RAJADHANI CO-OP URBAN BANK LTD before its day end process are run, the account shall become overdue by 1 day (that is 1 DPD). Accounts at 1DPD are also called as SMA‐ 0.

The customer needs to ensure that all payments due are received & realized by RAJADHANI CO-OP URBAN BANK LTD before its day‐ end processes are run on or before the due date.

What is SMA & what is NPA ?

An account is classified as Special Mention Account (SMA) or Non‐Performing Account (NPA) based on days past due (DPD).

The borrower accounts shall be flagged as overdue by the lending institutions as part of their day‐end processes for the due date, irrespective of the time of running such processes. Similarly, classification  of borrower accounts as SMA as well as NPA shall be done as part of day‐end process for the relevant date and the SMA or NPA classification date shall be the calendar date for which the day end process is run. In other words, the date of SMA/NPA shall reflect the asset classification status of an account at the day‐end of that calendar date.

Example: If due date of a loan account is March 31, 2025, and full dues are not received before the lending institution runs the day‐end process for this date, then this account shall get tagged as SMA‐0 and the date of overdue shall be March 31, 2025. If it continues to remain overdue, then this account shall get tagged as SMA‐1 upon running day‐end process on April 30, 2025 i.e. upon completion of 30 days of being continuously overdue. Accordingly, the date of SMA‐1 classification for that account shall be April 30, 2025.

Similarly, if the account continues to remain overdue, it shall get tagged as SMA‐2 upon running day‐ end process on May 30, 2025 and if continues to remain overdue further, it shall get classified as NPA upon running day‐end process as per extant asset classification norms.

How to move your account out of NPA ?

Loan accounts classified as NPAs may be upgraded as ‘standard’ asset only if entire arrears of interest and principal are paid by the borrower. With regard to upgradation of accounts classified as NPA due to restructuring, non‐achievement of date of commence of commercial operations (DCCO), etc., the instructions as specified for such cases shall continue to be applicable.