Maya Iyer is a Software Professional who availed a Term Loan of ₹ 50 lacs at an interest of 9% p.a. from Cosmos Bank, Cochin for buying a XYZ Brand Vehicle. The loan was taken on 15th February, 2020 repayable in 10 Years

CS Professional · Banking and Insurance - Laws and Practice · PYQS · December 2025
Maya Iyer is a Software Professional who availed a Term Loan of ₹ 50 lacs at an interest of 9% p.a. from Cosmos Bank, Cochin for buying a XYZ Brand Vehicle. The loan was taken on 15th February, 2020 repayable in 10 Years' EMIs and is against Hypothecation of the vehicle. She serviced the EMIs up to 15th June, 2022, promptly. However, she was laid off by the company in July, 2022 and lost her job. The EMIs could not be serviced thereafter. The loan became overdue. Answer the following questions, with reference to the above situation, considering the Income Recognition & Asset Classification (IRAC) norms issued by RBI : When will the loan be classified under SMA category ?

Answer & Explanation:

RBI defines Special Mention Account (SMA) for early recognition of stress: SMA-0: Overdue up to 30 days SMA-1: Overdue 31-60 days SMA-2: Overdue 61-90 days Assuming EMI due on 15 July 2022 is unpaid: SMA-0: 16 July 2022 to 14 August 2022 SMA-1: 15 August 2022 to 13 September 2022 SMA-2: 14 September 2022 to 13 October 2022

Topics: Banking Operations

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