RBI's New Norms Likely To Increase NBFCs Bad Loans By One-Third: Report
NDTV
The clarification included classification of special mention account (SMA) and NPA on a day-end position basis and upgrade from an NPA to standard category only after clearance of all outstanding overdues.
The recent clarification by the Reserve Bank of India on non-performing advances (NPA) may increase non-banking financial companies'' (NBFC) bad loans by one-third, says a report. Last month, the RBI had provided clarification on income recognition asset classification and provisioning (IRAC) norms for banks, NBFCs and All-India Financial Institutions.
The clarification included classification of special mention account (SMA) and NPA on a day-end position basis and upgrade from an NPA to standard category only after clearance of all outstanding overdues.
"The RBI's clarification on non-performing advances (NPAs) accounting is likely to increase NPAs by around one-third for non-banking finance companies (NBFCs)," domestic rating agency India Ratings and Research said in a report on Friday.
However, the impact on provisioning could be modest, given NBFCs are using Indian Accounting Standards (IND-AS) and generally for higher rated NBFCs, provision policy is more conservative than IRAC requirements.
