Coronavirus impact | Finance ministry, RBI consider easing NPA classification duration to 180 days: Report

Amid the coronavirus pandemic, the Reserve Bank of India (RBI) and finance ministry may ease the time period for classifying overdue loans as non-performing assets (NPAs) to 180 days from the current 90 days, Business Standard reported.

The NPA delinquency relaxation to 180 days "may be heavily qualified to prevent its abuse" a source told the publication.

The revision in the timeline to recognise NPAs will be staggered, having ‘start-stop dates’ which will finally be brought back to the current 90 days by the end of 2020-21, the report said.

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The finance ministry and RBI are also considering allowing rescheduling of accounts classified as overdue, stressed or NPAs as of December 2019 without being downgraded, the report said.

Fresh funding (with a minimum repayment period of 18 to 24 months) is to be considered, the report added.

Moneycontrol could not independently verify the story.

Interest accumulated as on January 1, 2020, will be allowed to be repaid in six monthly installments from October 1 to March 31, 2021, Business Standard reported.

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There was a concern that the NPA delinquency period of 90 days might hurt some depositors, since the central bank had on March 27 granted a three-month moratorium on term loans. Depositors who require three months to make the payments might get downgraded from regular accounts to NPAs.

“These borrowers may default and get downgraded as NPAs under the current norms due to their inability to service the interest component on which there is no breather,” said a source.