Bank of India’s branches will become more active in monitoring special mention accounts (SMAs) where the principal or interest payment is overdue for 1-30 days and take remedial steps to ensure these accounts do not migrate lower in risk gradation and turn non-performing.

Apart from SASCL (System Asset Classification), the focus will shift to SMA monitoring this year, per the public sector bank’s latest annual report.

Atanu Kumar Das, MD and CEO, said that branches will be focused on monitoring SMA-0 accounts so that remedial actions can be taken at initial stages, and the concerned account does not move further to SMA-1 category or SASCL.

“We plan to push SMA data to branches directly instead of National Banking Groups (present practice),” he said.

Identifying probable slippages

SASCL is a predictive program in identifying the probable slippages showing overdue of more than two months, based on record of recovery as well as for accounts showing technical irregularities such as non-submission of Stock Statement/Quarterly Information Statement over three months, insufficient/no credit in cash credit accounts, etc.

SMA-1 is an account where the principal or interest payment is overdue for 31-60 days.

Reduction in bad loans this fiscal

The aforementioned move to focus on SMA accounts comes in the wake of the bank achieving a modicum of success in reducing bad loans in FY22.

Gross non-performing assets (GNPAs) came down 19.33 per cent from ₹56,535 crore in March 2021 to ₹45,605 crore in March 2022.  Gross NPA ratio declined to 9.98 per cent of gross advances in March 2022 (13.77 per cent).

Net NPA ratio too came down to 2.34 per cent of net advances in March 2022 (3.35 per cent). 

“The bank is in the process of making an automated system for managing SMA portfolio. This system will cover SMA risk gradation, collection action, geo-tagging, real-time SMA analysis, including pushing of alerts, which will lead to better slippage management,” Das said.