·
Banks should classify an
account as NPA only if the interest charged during any quarter is not serviced
fully within 90 days from the end of the quarter
·
An account should be
treated as 'out of order' if the outstanding balance remains continuously in
excess of the sanctioned limit/drawing power In cases where the outstanding
balance in the principal operating account is less than the sanctioned
limit/drawing power, but there are no credits continuously for 90 days as on
the date of Balance Sheet or credits are not enough to cover the interest
debited during the same period, these accounts should be treated as 'out of
order'.
·
Any amount due to the bank
under any credit facility is 'overdue' if it is not paid on the due date fixed
by the bank.
·
interest on advances
against term deposits, NSCs, IVPs, KVPs and life policies may be taken to
income account on the due date, provided adequate margin is available in the
accounts.
·
a substandard asset would
be one, which has remained NPA for a period less than or equal to 12 months. a
substandard asset would be one, which has remained NPA for a period less than
or equal to 12 months.
·
If arrears of interest and
principal are paid by the borrower in the case of loan accounts classified as
NPAs, the account should no longer be treated as nonperforming and may be
classified as 'standard' accounts.
·
Advances against Term
Deposits, NSCs, KVP/IVP, etc, need not be treated as NPAs. Advances against
gold ornaments, Government securities and all other securities are not covered
by this exemption.
