{"id":6760,"date":"2021-12-03T15:06:55","date_gmt":"2021-12-03T09:36:55","guid":{"rendered":"https:\/\/tradebrains.in\/features\/biz-study-nbfc\/"},"modified":"2021-12-03T16:16:41","modified_gmt":"2021-12-03T10:46:41","slug":"biz-study-nbfc","status":"publish","type":"post","link":"https:\/\/tradebrains.in\/features\/biz-study-nbfc\/","title":{"rendered":"RBI new norms likely to increase NBFCs bad loans by one-third: Study"},"content":{"rendered":"<div class=\"trade-content_2\" style=\"margin-left: auto;margin-right: auto;text-align: center;\" id=\"trade-2219767073\"><p><a href=\"https:\/\/tradebrains.in\/get\/telegram\/\"><img decoding=\"async\" class=\"alignnone wp-image-101992\" src=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2023\/01\/telegram-channel-300x119.png\" alt=\"\" width=\"148\" height=\"59\" \/><\/a> <a href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMN3Epgswxc--Aw?hl=en-IN&amp;gl=IN&amp;ceid=IN%3Aen\"><img decoding=\"async\" class=\"alignnone wp-image-123430\" src=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-300x82.png\" alt=\"follow-on-google-news\" width=\"222\" height=\"61\" srcset=\"https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-300x82.png 300w, https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news-150x41.png 150w, https:\/\/tradebrains.in\/features\/wp-content\/uploads\/2024\/05\/follow-on-google-news.png 468w\" sizes=\"(max-width: 222px) 100vw, 222px\" \/><\/a><\/p>\n<\/div><p><span style=\"font-weight: 400;\">The recent clarification by the Reserve Bank of India on non-performing advances (NPA) may increase non-banking financial companies (NBFCs) bad loans by one-third, says a report.<\/span><\/p><div class=\"trade-content_7\" style=\"margin-left: auto;margin-right: auto;text-align: center;\" id=\"trade-3442173325\"><!-- Composite Start --> \r\n <div id=\"M923760ScriptRootC1549812\"> \r\n <\/div> \r\n <script src=\"https:\/\/jsc.mgid.com\/t\/r\/tradebrains.in.1549812.js\" async> \r\n <\/script> \r\n <!-- Composite End --><\/div><p><span style=\"font-weight: 400;\">A non-performing asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments are late or missed.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Last month, the RBI had provided clarification on income recognition asset classification and provisioning (IRAC) norms for banks, NBFCs and All-India Financial Institutions.<\/span><\/p><p><span style=\"font-weight: 400;\">The clarification included classification of special mention account (SMA) and NPA on a day-end position basis and upgrade from an NPA to standard category only after clearance of all outstanding overdue.&nbsp;&nbsp;<\/span><\/p><div class=\"trade-content_5\" id=\"trade-2489963627\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-4023722985638610\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<!-- in_content_2_news -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-4023722985638610\"\r\n     data-ad-slot=\"7925020301\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><\/div><p><span style=\"font-weight: 400;\">A few days ago, the RBI set the ceiling amount of loans that the NBFCs can issue. The investors willing to subscribe for IPOs can take a maximum loan amount of Rs 1 crore from the NBFCs.&nbsp;<\/span><\/p><p><span style=\"font-weight: 400;\">\u201cThe RBI\u2019s clarification on non-performing advances (NPAs) accounting is likely to increase NPAs by around one-third for non-banking finance companies (NBFCs),\u201d domestic rating agency India Ratings and Research said in a report on Friday.<\/span><\/p><p><span style=\"font-weight: 400;\">However, the impact on provisioning could be modest, given NBFCs are using Indian Accounting Standards (IND-AS) and generally, for higher rated NBFCs, provision policy is more conservative than IRAC requirements.&nbsp; The report said the RBI circular also calls for daily stamping of accounts to count the number of days they are overdue instead of a monthly or quarterly stamping. This again would result in an accelerated pace of NPA recognition for accounts, it said.<\/span><\/p><p><span style=\"font-weight: 400;\">NBFC borrowers, typically where there is cash collection, pay their overdue generally with some delays. Accounts can get into the NPA category just for a day\u2019s delay in paying the instalments and once it gets categorised as NPA it will not be able to become standard unless all the arrears are cleared, the report said.<\/span><\/p><p><span style=\"font-weight: 400;\">\u201cSo, in other words, accounts would get categorised as NPAs at a faster pace and would remain sticky in that category for a longer period of time. Both these accounting treatments would result in higher headline numbers for NBFCs,\u201d it said.<\/span><\/p><p><span style=\"font-weight: 400;\">It may so happen that NBFCs would disclose NPA numbers as per IRAC norms and stage 3 numbers as per Ind-As separately in their disclosures, the agency said.<\/span><\/p><div class=\"trade-content-10\" id=\"trade-3417018778\"><script async src=\"https:\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js?client=ca-pub-4023722985638610\"\r\n     crossorigin=\"anonymous\"><\/script>\r\n<!-- in_content_3_news -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:block\"\r\n     data-ad-client=\"ca-pub-4023722985638610\"\r\n     data-ad-slot=\"2969612066\"\r\n     data-ad-format=\"auto\"\r\n     data-full-width-responsive=\"true\"><\/ins>\r\n<script>\r\n     (adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script><\/div><div class=\"trade-after-content\" id=\"trade-1910071387\"><div id=\"taboola-below-article-thumbnails\"><\/div>\r\n<script type=\"text\/javascript\">\r\n  window._taboola = window._taboola || [];\r\n  _taboola.push({\r\n    mode: 'alternating-thumbnails-a',\r\n    container: 'taboola-below-article-thumbnails',\r\n    placement: 'Below Article Thumbnails',\r\n    target_type: 'mix'\r\n  });\r\n<\/script>\r\n<script type=\"text\/javascript\">\r\n  window._taboola = window._taboola || [];\r\n  _taboola.push({flush: true});\r\n<\/script><\/div>","protected":false},"excerpt":{"rendered":"<p>The recent clarification by the Reserve Bank of India on non-performing advances (NPA) may increase non-banking financial companies (NBFCs) bad loans by one-third, says a report. A non-performing asset (NPA) refers to a classification for loans or advances that are in default or in arrears. A loan is in arrears when principal or interest payments [&hellip;]<\/p>\n","protected":false},"author":15,"featured_media":2342,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[1513,31],"tags":[],"class_list":["post-6760","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editor-pick","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v20.5 (Yoast SEO v25.0) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>RBI new norms likely to increase NBFCs bad loans by one-third: Study<\/title>\n<meta name=\"description\" content=\"The recent clarification by the Reserve Bank of India on non-performing advances (NPA) may increase NBFCs bad loans by one-third...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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