Time Extended for UCBs to make Additional Provisioning for NPAs - આરબીઆઈ - Reserve Bank of India
Time Extended for UCBs to make Additional Provisioning for NPAs
RBI / 2004-05/194
UBD.PCB.Cir.21 /12.05.05/2004-05
September 27, 2004
The Chief Executive Officers of All Primary (Urban) Co-operative banks
Dear Sir/Madam,
Annual Policy Statement for the Year 2004-05: Additional provisioning requirements for NPAs
Please refer to our circular UBD.BPD.PCB. Cir 55/12.05.05/03-04 dated June 30, 2004, wherein UCBs were advised about the enhanced provisioning requirement on the secured portion of advances classified as doubtful for more than three years.
2. The Reserve Bank has received requests from banks and Federation/ Association of UCBs for giving UCBs some more time to restructure their accounts and progressively meet stricter prudential norms. Taking into account the submissions made in this regard, it has been decided to grant more time to the banks to meet the 100 % provisioning norm for advances identified as doubtful for more than three years, as under :
A. Secured portion
Period for which the advance has remained in 'doubtful' category |
Provision requirement on secured portion |
More than three years (i) outstanding stock of NPAs as on March 31, 2006
(ii) advances classified as 'doubtful more than three years' on or after April 1, 2006 |
(i) 50 percent upto March 2006, as hitherto 60 per cent as on March 31, 2007 75 per cent as on March 31, 2008 100 per cent as on March 31, 2009 (ii) 100 per cent |
B (i) Please note that for the portion of the advance, which is not covered by the realizable value of tangible security to which the bank has a valid recourse and the realizable value is estimated on a realistic basis, provision will be to the extent of 100 per cent as hitherto.
(ii) Similarly, 100% provision has to be made for loss assets as hitherto.
(iii) A few illustrations are furnished in annexure for clarity in this regard.
3. Banks are further advised in their own interest to make suitable additional provisions in the intervening years to ensure a smooth transition to the revised norms, which becomes effective from March 31, 2007.
4. Please acknowledge receipt of this circular to the concerned Regional Office.
Yours faithfully,
(K.R.Ananda)
Chief General Manager-in-Charge
Encl : As above
Illustrations:
The outstanding amount as on 31 March 2006: Rs. 25,000
Realisable value of security: Rs. 20,000Period for which the advance has remained in 'doubtful' category as on 31 March 2006: 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 2006 |
50 |
10000 |
100 |
5000 |
15000 |
31 Mar 2007 |
60 |
12000 |
100 |
5000 |
17000 |
31 Mar 2008 |
75 |
15000 |
100 |
5000 |
20000 |
31 Mar 2009 |
100 |
20000 |
100 |
5000 |
25000 |
II. Advances classified as 'doubtful more than three years' on or after 1 April 2006
The outstanding amount as on 31 March 2006 : Rs. 10,000
Realisable value of security : Rs. 8,000
Period for which the advance has remained in 'doubtful' category as on 31 March 2006 : 2.5 years
Provisioning requirement :
As on … |
Asset classification |
Provisions on secured portion |
Provisions on unsecured portion |
Total (Rs.) |
||
% |
Amt |
% |
Amt |
|||
31 Mar 2006 |
Doubtful 1 to 3 years |
30 |
2400 |
100 |
2000 |
4400 |
31 Mar 2007 |
Doubtful > 3 years |
100 |
8000 |
100 |
2000 |
10000 |