Income Recognition, Asset Classification, and Provisioning
The Reserve Bank of India (RBI) has issued a master circular for Urban Co-operative Banks (UCBs) on income recognition, asset classification, provisioning, and other related matters.
Non-Performing Assets (NPA)
Assets are classified as NPAs if principal or interest payment is overdue for 90 days or more. This includes credit card accounts, agricultural advances, and other assets.
Identification of NPAs should be done on an ongoing basis, and interest should be charged at monthly rests.
Special Mention Accounts (SMA)
SMA sub-categories are based on the outstanding balance remaining continuously in excess of the sanctioned limit or drawing power for a period of:
– SMA-0: 0-30 days
– SMA-1: 31-60 days
– SMA-2: 61-90 days
UCBs are required to report large exposures to the Central Repository of Information on Large Credits (CRILC).
Chat with the Master Circular: