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Our Bureau

Mumbai , Aug 3

THE Reserve Bank of India has asked financial institutions to introduce graded higher provisioning according to the age of NPAs, in the doubtful category for more than three years, effective from March 31, 2005.

In a circular to the chiefs of `All-India Term Lending and Refinancing Institutions,' the apex bank has said, consequent to this, the increase in the provisioning requirement on the secured portion would be applied in a phased manner over a three-year period in respect of the existing stock of NPAs classified as `doubtful for more than three years' as on March 31, 2004.

In respect of all advances classified as `doubtful for more than three years' on or after April 1, 2004 to July 1, 2004, in case of NHB — the provisioning requirement would be 100 per cent.

Accordingly, the provisioning norm for advances identified as `doubtful for more than three years' will be as under with effect from March 31, 2005.

The unsecured portion of the advances, which is not covered by the realisable value of tangible security to which the FI has a valid recourse and the realisable value is estimated on a realistic basis, provision will continue to be to the extent of 100 per cent, as until now.

Under the secured portion, when the advances have remained in the doubtful category for more than three years, for the outstanding stock of NPAs as on March 31, 2004, the provisioning requirement would be 60 per cent as on March 31, 2005, 75 per cent as on March 31, 2006, and 100 per cent as on March 31, 2007.

For advances classified as doubtful for more than three years on or after April 1, 2004 to July1, 2004, in the case of NHB — the provisioning requirement would be 100 per cent.

More Stories on : Non-Performing Assets | RBI & Other Central Banks

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