Graded NPA Provisioning for StCBs and DCCBs: Doubtful >3 Years

Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 481 kb ) DCCBs: Additional Provisioning Requirement for NPAs RBI/2004-05/379 RPCD.RF.BC.No.82/07.37.02/2004-05 March 1, 2005 All State Co-operative Banks and District Central Co-operative Banks Dear Sir, Annual Policy Statement for the year 2004-05: Additional Provisioning Requirement for NPAs At present, banks are required to make provisions on NPAs on a graded scale based on the age of the NPA. However, in respect of NPAs included in ‘doubtful for more than three years’ category, the provisioning requirement on the secured portion remains unchanged at 50%, irrespective of its age, till it is identified as a loss asset. 2. With the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the chances / extent of recovery of an asset reducing over a period of time, it is essential that banks expedite recovery of NPAs. Paragraph 122 of the Annual Policy Statement for the year 2004-05 ( copy enclosed ) proposes to introduce graded higher provisioning according to the age of NPAs in ‘doubtful for more than three years’ category with effect from March 31, 2005. 3. However, it has been decided that in respect of State and District Central Co-operative Banks, all advances classified as ‘doubtful for more than three years’ the provisioning requirement would be as under: (a) Unsecured portion For portion of the advance, which is not covered by the realisable value of tangible security to which the bank has a valid recourse and the realisable value is estimated on a realistic basis, provision will be to the extent of 100 per cent as hitherto. (b) Secured portion Period for which the advance has remained in 'doubtful' category Provision requirement on secured portion (i )outstanding stock of NPAs classified as doubtful for more than three years as on March 31, 2007 (ii) advances classified as 'doubtful more than three years' on or after April 1, 2007 60 per cent as on March 31, 2008 75 per cent as on March 31, 2009 100 per cent as on March 31, 2010 100 per cent A few illustrations are furnished in Annex for clarity in this regard. 4. The contents of this circular may be placed before the Board of Directors of your bank. 5. All other instructions contained in our circular RPCD.No. BC 155/07.37.02/95-96 dated June 22, 1996 as amended from time to time remain unchanged. 6. Please acknowledge receipt to our concerned Regional Office. Yours faithfully, (C.S.Murthy) Chief General Manager In-Charge Extract of Annual Policy Statement for the year 2004-05 " Provisioning Requirement for NPAs 122. At present, banks are required to make provisions on NPAs on a graded scale based on the age of the NPA. However, in respect of ‘doubtful assets for more than three years’, the provisioning requirement on the secured portion remains unchanged at 50 per cent, till it is identified as a loss asset. With the enactment of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the chances/extent of recovery of an asset reducing over a period of time, it is essential that banks expedite recovery of NPAs. Accordingly, it is proposed: To introduce graded higher provisioning requirement according to the age of NPAs, which are included under ‘doubtful for more than three years’ category, with effect from March 31, 2005." Annex Illustrations: I. Existing stock of advances classified as ‘doubtful more than 3 years’ as on 31 March 2007 The outstanding amount as on 31 March 2007: Rs 25,000 Realisable value of security : Rs 20,000 Period for which the advance has remained in 'doubtful' category as on 31 March 2007 : 4 years ( i.e Doubtful > 3 years) Provisioning requirement: As on … Provisions on secured portion Provisions on unsecured portion Total (Rs) % Amt % Amt 31 Mar 2007 50 10000 100 5000 15000 31 Mar 2008 60 12000 100 5000 17000 31 Mar 2009 75 15000 100 5000 20000 31 Mar 2010 100 20000 100 5000 25000 II. Advances classified as 'doubtful more than three years' on or after 1 April 2007 The outstanding amount as on 31 March 2007: Rs 10,000 Realisable value of security : Rs 8,000 Period for which the advance has remained in 'doubtful' category as on 31 March 2007 : 2.5 years Provisioning requirement: As on … Asset classification Provisions on secured portion Provisions on unsecured portion Total (Rs) % Amt % Amt 31 Mar 2007 Doubtful 2.5 years 30 2400 100 2000 4400 31 Mar 2008 Doubtful > 3 years 100 8000 100 2000 10000 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links : Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2004-05/379 · issued 01 Mar 2005. The plain-English explanation above is BankPulse’s own independent summary.

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Topics: Co-operative Banks

Key dataSee the live numbers behind this topic: RBI Penalty Tracker, NPA / Asset-Quality Tracker — updated from official RBI data.

Key termsPlain-English definitions of terms in this circular — see the full Indian banking glossary. KYC / AML · Gross NPA (GNPA) · Deposit insurance (DICGC) · Scheduled Commercial Bank (SCB)