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Customer Awareness on Concepts used in Asset Classification Norms

As per RBI's notification on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications ('RBI Circular') dated November 12, 2021 norms of NPA classification has been revised.

Keeping in view the instructions contained in RBI Circular (RBI/2021-2022/125 DOR.STR.REC.68/21.04.048/2021-22) dated November 12, 2021 relating to Asset Classification etc. the concepts stated herein below used by the Company (VASTU HFC) in its operations/loan documents shall have the meaning assigned to them as explained hereunder against each of them.

  • Due Date/Repayment Date –The date on which the borrower is required to make payment of his/her dues to VASTU HFC as mentioned in the Loan Agreement.
  • Overdue – An amount will be treated as overdue if it is not paid on the due date fixed by VASTU HFC.
  • Days Past Due – Means the number of days, the account is overdue.
  • SMA – means Special Mention Account. These are tracked on the basis of days past due. There are following three categories under SMA
    Days Past Due (DPD) SMA Sub-category
    Up to 30 days SMA-0
    More than 30 days and up to 60 days SMA-1
    More than 60 days and up to 90 days SMA-2
  • An illustration of such classification is as follows: -
    1. SMA-0 - If due date of a loan account is 31st March, 2021, and full dues are not received on this date, the account shall be SMA-0 on day end of 31st March, 2021.
    2. SMA-1 - If the account continues to remain overdue, then this account shall get tagged as SMA-1 upon completion of 30 days of being continuously overdue i.e., 30th April, 2021.
    3. SMA-2 - If the account continues to remain overdue, it shall get tagged as SMA-2 on 30th May, 2021.
    4. NPA – If the account continues to remain overdue further, it shall get classified as NPA on 29th June, 2021.
  • NPA – means Non-Performing Asset. NPA – A term loan account is deemed NPA after it remains overdue for a period of 90 days. For instance, in the above illustration, if the account continues to remain overdue further, it shall get classified as NPA on 29th June, 2021.
    However, in certain events like fraud, erosion of security etc. an account which may be making regular payment can be classified as a Loss Asset.
    These instructions shall be effective from 12th November, 2021. Accordingly, in respect of any borrower account which becomes overdue on or after 12th November, 2021, its classification as NPA shall be based on the account being overdue for more than 90 days.
  • Day-End Process – VASTU HFC has a day-end process which is an accounting process of closing the books for the day. If the amount due is not received on due date it shall get classified overdue upon running day end process and be declared as SMA / NPA on day-end on the basis of days past due.
  • Upgradation of accounts classified as NPA – Accounts classified as NPAs cannot be upgraded to standard category till the time complete overdue amount i.e., entire arrears of interest and principal are repaid.
    In case of any further clarifications, please feel free to contact our representative at the nearest Vastu Housing branch, or email us at customercare@vastuhfc.com or call us on our toll-free number 1800 22 0001.
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