RBI extends deadline for NBFCS to fulfill new NPA upgradation norms


The Reserve Bank of India on Tuesday prolonged the timeline by six months for NBFCs to stick the brand new NPA recognition norms. Earlier the regulator had set March 31 deadline for non-bank lenders to improve NPAs solely in any case arrears and principal dues are paid.

“NBFCs may have time until September 30, 2022 to place in place the required programs to implement this provision,” the regulator mentioned.

The RBI additionally clarified that loans categorized as NPA can be upgraded to straightforward class provided that all dues are paid.

“In case of debtors having a couple of credit score facility from a lending establishment, mortgage accounts shall be upgraded from NPA to straightforward asset class solely upon reimbursement of complete arrears of curiosity and principal pertaining to all of the credit score services,” the RBI mentioned.

The brand new RBI guidelines require NBFCs to deal with such accounts as NPA till the borrower updates the account by paying all of the EMIs due.

The banking sector follows an automatic system for tagging accounts as NPAs, below which the accounts are tagged as NPAs on the day the account turns into overdue for greater than 90 days. Nevertheless, in lots of NBFCs, this classification is made after the tip of 90 or 180 days.

Typically, many non-bank lenders improve NPAs as overdues within the accounts decreased to lower than 90 days, whereas banks don’t improve an NPA till all of the overdue quantities are collected. With these adjustments, the norms have been made largely congruent between banks and NBFCs.

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