What changed
For Tier-I UCBs, the 180-day NPA delinquency norm is extended by one year to March 31, 2008, and the 12-month substandard-to-doubtful classification period will be effective from April 1, 2008. Full provisioning on secured D-III assets is deferred to April 1, 2010, with a graduated schedule up to 2013. For Tier-II UCBs, 100% provisioning now applies to D-III assets classified on or after April 1, 2007 (instead of April 1, 2006), with a revised graduated provisioning schedule from March 31, 2007 to March 31, 2010.
What it means for you
Tier-I UCBs get additional time to transition to stricter norms, reducing immediate provisioning pressure and allowing them to strengthen credit processes. Tier-II UCBs face a slight easing on new D-III assets but must still accelerate provisioning for existing stock. Banks need to align their NPA recognition and provisioning timelines with these revised deadlines to avoid regulatory gaps.
What you must do
- Update NPA classification policies for Tier-I UCBs to continue 180-day norm until March 31, 2008.
- Revise provisioning schedules for D-III assets as per the graduated percentages for both Tier-I and Tier-II banks.
- Ensure Tier-II UCBs apply 100% provisioning on D-III assets classified on or after April 1, 2007.
- Monitor outstanding D-III stock and calculate provisions according to the new timelines.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Tier-I UCBs (single branch or multi-branch within one district, deposits up to Rs.100 crore), Tier-II UCBs (all other UCBs)
What is the new deadline for Tier-I UCBs to adopt the 90-day NPA norm?
The 180-day delinquency norm is extended to March 31, 2008, meaning Tier-I UCBs must transition to the 90-day norm from April 1, 2008.
When must Tier-II UCBs start 100% provisioning on new D-III assets?
Tier-II UCBs must provide 100% on secured portion of D-III assets classified as doubtful more than three years on or after April 1, 2007.
What is the graduated provisioning schedule for Tier-I UCBs' existing D-III stock?
For stock as on March 31, 2010: 50% by March 31, 2010; 60% by March 31, 2011; 75% by March 31, 2012; 100% by March 31, 2013.