RBI Asset Classification & Provisioning Mastery
Master regulatory standards for Special Mention Accounts (SMA-0, 1, 2), Sub-Standard, Doubtful stages, and calculations for provisioning requirements.
Sub-Standard, Doubtful (D1/D2/D3) & ECGC Cover Simulator
1. Loan Exposure & Realizable Collateral (₹ Lakhs)
2. RBI Provisioning Breakdown & PCR
NPA Asset Staging & SMA Categories
Loans are classified by banks into Standard and Non-Performing Assets (NPA) based on the period of default. Under RBI guidelines, accounts showing early signs of stress are classified as Special Mention Accounts (SMA) to initiate recovery actions early:
| SMA Stage | Principal or Interest Overdue Period |
|---|---|
| SMA-0 | 1 to 30 Days overdue |
| SMA-1 | 31 to 60 Days overdue |
| SMA-2 | 61 to 90 Days overdue |
| NPA | Overdue for more than 90 Days |
RBI Provisioning Norms (Secured vs Unsecured)
Once an asset is classified as an NPA, the required provision depends on how long the account has remained an NPA and the value of tangible collateral security:
| NPA Category | Secured Value Provision Rate | Unsecured Value Provision Rate |
|---|---|---|
| Sub-Standard (NPA ≤ 12 Months) | 15% | 25% |
| Doubtful Stage 1 (D1: Up to 1 Year in Doubtful) | 25% | 100% |
| Doubtful Stage 2 (D2: 1 to 3 Years in Doubtful) | 40% | 100% |
| Doubtful Stage 3 (D3: > 3 Years in Doubtful) | 100% | 100% |
| Loss Assets | 100% | 100% |
$$\text{Total Provision} = (\text{Secured Value} \times \text{Provision Rate}) + (\text{Net Unsecured Shortfall} \times \text{Unsecured Rate})$$
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Read Standard Motors Case StudyCAIIB ABM / JAIIB PPB: RBI IRAC & NPA Provisioning Numerical MCQs
Q1. A term loan has an outstanding balance of ₹500 Lakh, classified as Doubtful-2 (D2: in Doubtful category for 1 to 3 years). Realizable value of tangible security is ₹300 Lakh, and ECGC cover is 50%. What is the total provision required under RBI IRAC norms?
Q2. Under RBI IRAC guidelines, what is the provisioning rate required on an "Unsecured Sub-Standard" exposure (where ab-initio realizable security was not more than 10%)?
Q3. When a Cash Credit (CC) or Overdraft (OD) account has not had sufficient credits in the account to cover the interest debited during the previous 90 days period, how is it classified by RBI?
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