Strict rules for taking the account out of NPA

The RBI has tightened the rules for taking an account out of NPA. The RBI has clearly stated that the account should not be brought out of NPA by mere payment of interest. Now financial institutions will also have to tell how much interest and how much principal is outstanding on that account while bringing it out of NPA. The RBI has given clear instructions to the banks in the clarification in respect of some others including the provisions issued on October 1 this year that no account should be brought out of NPA only on payment of interest.

RBI said that many banks and financial institutions have also taken NPA accounts out of NPA by paying only due interest or part payment. They are instructed to bring the NPA account out of this category only when the entire interest and principal arrears are not paid.

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