The Reserve Bank of India (“RBI”) had, on November 12, 2021, issued clarifications with respect to the master circular on ‘Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated October 1, 2021 (“Existing Clarifications”) to the following entities:
(Hereinafter collectively referred to as “Entities”)
In view of the several queries received in relation to the Existing Clarifications, RBI has issued further clarifications on February 15, 2021 to the Entities. (“New Clarifications”).
By way of the New Clarifications, RBI has advised/ clarified as below:
i) The definition of ‘out of order’ shall be applicable to all loan products being offered as an overdraft facility, including those not meant for business purposes and/or which entail interest repayments as the only credits; and
ii) The ‘previous 90 days period’, as referred to under paragraph 6 of the Existing Clarifications, for determination of ‘out of order’ status of a CC/ OD account shall be inclusive of the day for which the day-end process is being run;
This update has been contributed by Nidhi Arya (Partner) and Arjun Gopalakrishnan (Senior Associate, Designate).
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