RESERVE BANK OF INDIA
CENTRAL OFFICE
DEPARTMENT OF BANKING OPERATIONS AND DEVELOPMENT
CENTRE -1, WORLD TRADE CENTRE
CUFFE PARADE, COLABA, MUMBAI-40005 |
| DBOD.BP.1665/21.04.048/2003-04 |
| 10 April 2004 |
The President
The Institute of Chartered Accountants of India
PB No. 7100, Indraprastha Marg,
New Delhi. - 110 002. |
|
Dear Sir,
Prudential norms on income recognition, asset classification and provisioning relating to advances
As you are aware, the 90 days payment delinquency norm is effective from March 31, 2004. In this connection, we have been receiving queries from auditors for clarification regarding the application of the 90 days payment delinquency norm. We clarify that in terms of our extant instructions, with effect from March 31, 2004, a loan or advance, other than certain agricultural advances would be a NPA where interest and/or instalment of principal remains overdue for a period of more than 90 days. Hence, as on March 31, 2004, any interest and/or instalment of principal falling overdue for more than 90 days would be NPA i.e. any asset classification done by the bank on any date up to and inclusive of March 30, 2004 will adopt the 180 days delinquency norm and from March 31, 2004 onwards, it will adopt the 90 days delinquency norm. An example is appended for clarity in this regard: | |
| Example: |
| 1. |
30.6.2003 |
NPA |
NPA |
NPA |
28.12.2003 |
| 2. |
31.8.2003 |
Not NPA |
NPA |
NPA |
28.2.2004 |
| 3. |
31.10.2003 |
Not NPA |
Not NPA |
NPA |
31.3.2004 |
| 4. |
31.12.2003 |
Not NPA |
Not NPA |
NPA |
31.3.2004 |
|
Thus, it may be observed that the 90 day norm should not be applied to accounts already classified as NPA before March 31, 2004. Consequently, there will be no need to re-work the asset classification status of account, which have become NPA before March 31, 2004, while applying the 90 days norm on March 31, 2004. |
|
ICAI may consider broadcasting the above clarification to its members for clarity. |
|
Yours faithfully,
Sd/-
( K. Damodaran)
Deputy General Manager | |
