Prudential Norms (IRAC) relaxed for Small Borrowers by 60 days: RBI

RBI Allows additional 60 days for compliance with Prudential Norms (IRAC) in the case of Small Borrowers for repayment of loans/ interest servicing

Based on representations (consequent upon demonetization) that small borrowers may need some more time to repay their loan dues, the RBI has reviewed and decided to provide an additional 60 days beyond what is applicable for recognition of a loan account as substandard, in respect of dues arising during 1 Nov. 2016 to 31 Dec. 2016, in the following cases:

i) Running working capital accounts (OD/CC)/crop loans, with any bank, the sanctioned limit whereof is ₹ 1 crore or less;

ii) Term loans, whether business or personal, secured or otherwise, the original sanctioned amount whereof is ₹ 1 crore or less, on the books of any bank or any NBFC, including NBFC (MFI). This shall include housing loans and agriculture loans.

Note: The limits at (i) and (ii) above are mutually exclusive limits applicable to respective category of loans.

iii) Loans sanctioned by banks to NBFC (MFI), NBFCs, Housing Finance Companies, and PACs and by State Cooperative Banks to DCCBs.

iv) The above guidelines will also be applicable to loans extended by DCCBs.

However, for above dispensation RBI has stipulated the following conditions:

i) It applies to dues payable between 1 Nov. and 31 Dec. 2016. REs shall note to ensure that this is a short-term deferment of classification as substandard due to delay in payment of dues arising during the period specified above and does not result in restructuring of the loans.

ii) Dues payable before 1 Nov. and after 31 Dec. 31, 2016, will be covered by the extant instruction for the respective regulated entity with regard to recognition of NPAs.

iii) The additional time given shall only apply to defer the classification of an existing standard asset as substandard and not for delaying the migration of an account across sub-categories of NPA.

RBI Notification dt. 21 Nov. 2016

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