NPA Categories and the PCR in 2022

In this article, I am going to discuss the NPA categories and PCR. So, the PCR is the provisioning coverage ratio. So, this means that the ratio of the percentage of the provisions that you need to make as per the tenure of your loan or as per the kind of loan that you have given. So, the PCR norms and the different percentage is the provisions that you have to pay. So, that’s what we’re going to take a look at, and also at the various categorizations of an NPA. 

Asset Classification

So, the first thing that we have to find out is the provisioning in the NPA accounts according to the asset in future classification. You might have heard about something called an IRAC. bank mitra csp So, IRAC status is the income recognition and asset classification status. This means that assets are classified as IRAC status. So, we have different kinds of statuses for different periods of the NPA.

Special mention account (SMA) and its types

We have something called the SMA or the special mention account. So, this means that if you are actually not able to take back your loan on the exact due date, so, for example, think that the due date of your loan was on October 1, 2020. So, if you are not able to pay. if October 2 comes and you are still not able to pay. Then, the bank will classify your account as SMA or a special mention account. There are three types of SMA that are the SMA 0, so, SMA 0 means that your account has been overdue for 0 days up to 30 days. So, from 0 to 30 days it will be SMS 0, then, you have something called SMA 1. So, this means your account has been overdue for 31 days up to 60 days. Then you have the SMA-2, so that is an account that is overdue for 61 to 90 days. So, till, after 90 days you are going to have a special mention account. So, when the 90-day threshold actually crosses over then, it becomes NPA. 

IRAC Status

Now you come to a different IRAC status, so, when your account is actually overdue for greater than 90 days and up to one year, then, it is called a sub-standard account. So, just remember that October 1 is your actual date. So, considering that example, 90 days are going to be completed on January 1st.  So, if, you are still not able to pay back, then, January 2 comes. So, when January 2 comes, your account becomes an NPA or non-performing asset and at that point in time, it becomes a sub-standard account. So, now that, it has become sub-standard. So, this is January 2, 2021, if your account remains as a sub-

NPA Categories and the PCR

standard account till January 2, 2022, then it becomes sub-standard. It stays as a sub-standard account for that one year. Then, if you are still not paying back, then, it goes to the doubtful category. So, it becomes the D-1 or the doubtful one. So, if your account is NPA for the second year as well. Then, you get to that Doubtful-1 account, and then, if it is for the third and the fourth year then, it will become the D-2 or Doubtful-2, and in the fifth year onwards it will become the Doubtful-3. So, these are the classification of the account as for the time frame in which it spends as a non-performing asset. So, that’s our asset classification and there is another one which is the Loss Assets.

NPA Categories and the PCR

Now, Loss Assets are those assets that the bank has recognized that we now need to actually write these accounts off, and we can still go ahead, and for the recovery spot, the loans will be written off and so those assets are actually classified as Loss Assets. kiosk sbi banking Now, the Loss Assets don’t have to be greater than 5 years or 6 years. Sometimes, if we find out that the assets are just unrecoverable. Then, we can declare them as a Loss Asset within one or two years. So, it is just another one of the asset classifications. So, that was all about NPA categorization.