What changed
RBI issued a consolidated version of the 2003 Guidelines, incorporating all amendments up to June 30, 2013, to provide a single reference document. The key definitions and requirements remain unchanged, but the circular ensures clarity by bringing all current instructions together.
What it means for you
For banks and lenders, this means SCs/RCs continue to operate under the same regulatory framework for acquiring and reconstructing financial assets. The 180-day NPA classification rule remains critical for asset quality assessment. Banks must ensure their transactions with SCs/RCs align with these updated guidelines.
What you must do
- Review your existing agreements with SCs/RCs to ensure compliance with the consolidated 2003 Guidelines.
- Update internal NPA classification processes to reflect the 180-day overdue criterion for assets transferred to SCs/RCs.
- Train credit and recovery teams on the applicability of these directions to trusts and the exemptions for certain paragraphs.
- Monitor RBI website for any further amendments to these guidelines.
Who it affects
Securitisation Companies (SCs), Reconstruction Companies (RCs), Banks and financial institutions dealing with SCs/RCs, Trusts managed by SCs/RCs
What is the NPA classification rule for assets acquired by SCs/RCs?
An asset is classified as NPA if interest or principal (or instalment thereof) is overdue for 180 days or more from the date of acquisition or the due date as per contract between the borrower and the originator, whichever is later, or under other specified conditions.
What is the effective date of these consolidated guidelines?
The original guidelines came into force on April 23, 2003. This circular consolidates amendments up to June 30, 2013, and is dated July 1, 2013.