Smart Agro Foods Ltd. is a listed entity at BSE and NSE. It started its operations since September, 2015. The Company is engaged in the business of trading of agriculture commodities. It was enjoying a working capital ca

An asset, including a leased asset, becomes non-performing when it ceases to generate income for the bank. A Non-Performing Asset (NPA) is a loan or an advance where: Interest and/or instalment of principal remain overdue for a period of more than 90 days in respect of a term loan. The account remains 'out of order' in respect of an Overdraft / Cash Credit for more than 90 days. Regular / ad hoc limits not been renewed within 180 days from the due date / date of ad hoc sanction. The bill remains overdue for a period of more than 90 days in the case of bills purchased and discounted. The instalment of principal or interest thereon remains overdue for two crop seasons for short duration crops (maturing within one year). The instalment of principal or interest thereon remains overdue for one crop season for long duration crops (maturing after one year) (other agriculture loans 90 days norms are applicable). The amount of liquidity facility remains outstanding for more than 90 days, in respect of a securitization transaction undertaken in terms of guidelines on securitisation dated 1st February, 2006. In respect of derivative transactions, the overdue receivables representing positive mark-to-market value of a derivative contract, if these remain unpaid for a period of 90 days from the specified due date for payment. If minimum amount due, indicated in monthly Credit Card Statement is not paid fully within 90 days from the due date of the bill. Loans guaranteed by State Govt. the normal rules are applicable. Where guaranteed by Central Govt. loans will continued to be standard category and no provision shall be made. In case of interest payments, banks should, classify an account as NPA only if the interest due and charged during any quarter is not serviced fully within 90 days from the end of the quarter. Accounts with temporary deficiencies In addition, an account may also be classified as NPA Accounts with temporary deficiencies. The classification of an asset as NPA should be based on the record of recovery. Bank should not classify an advance account as NPA merely due to the existence of some deficiencies which are temporary in nature such as non-availability of adequate drawing power based on the latest available stock statement, balance outstanding exceeding the limit temporarily, non-submission of stock statements and non-renewal of the limits on the due date, etc. In the matter of classification of accounts with such deficiencies banks may follow the following guidelines: Banks should ensure that drawings in the working capital accounts are covered by the adequacy of current assets, since current assets are first appropriated in times of distress. Drawing power is required to be arrived at based on the stock statement which is current. However, considering the difficulties of large borrowers, stock statements relied upon by the banks for determining drawing power should not be older than three months. The outstanding in the account based on drawing power calculated from stock statements older than three months, would be deemed as irregular. A working capital borrowal account will become NPA if such irregular drawings are permitted in the account for a continuous period of 90 days even though the unit may be working or the borrower's financial position is satisfactory. Regular and ad hoc credit limits need to be reviewed/regularised not later than three months from the due date / date of ad hoc sanction. In case of constraints such as non-availability of financial statements and other data from the borrowers, the branch should furnish evidence to show that renewal/review of credit limits is already on and would be completed soon. In any case, delay beyond six months is not considered desirable as a general discipline. Hence, an account where the regular / ad hoc credit limits have not been reviewed / renewed within 180 days from the due date/date of ad hoc sanction will be treated as NPA. Advances against Term Deposits, Kisan Vikas Patras, National Savings Certificate and insurance policies need not be treated as NPAs as long as adequate margin is available in the account. Advances against gold and other securities are not covered under this exemption.