The NPA account will be upgraded only after all the interest has been repaid
MUMBAI: The Reserve Bank of India (RBI) has clarified the rules for upgrading an account classified as an NPA. The central bank clarified that the lender should classify NPAs as 'standard' assets only when the full amount of interest and principal is paid by the borrower. It was alleged against the Reserve Bank that some lending institutions had classified NPAs as standard assets only when interest was paid and only partial arrears were paid. Explaining the matter, the RBI said that the interest and principal of an account classified as NPA should be upgraded and placed in the category of standard assets only when it is paid by the borrower. The Reserve Bank has directed the lenders to provide information in the loan agreement such as actual date of repayment of loan, repayment period, different details of principal and interest and date of classification as SMA / NPA. As per the existing rules, if the repayment is not made on the due date, the amount is referred by the ba...