Cash Credit / Overdraft / Loan Against Property Dropline Overdraft - Out of Order Classification
In accordance with the Master Circular on Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – DOR.STR.REC.68/21.04.048/2021-22 issued by the Reserve Bank of India (RBI) dated November 12, 2021 read along with further directions and addendums as applicable (“Regulation”), Cash credit / Overdraft / Dropline Overdraft Account should have credit transactions equivalent to or exceeding the interest due and payable for any 90 day period. In an event, the summation of all credits is not covering the interest debited for previous 90 day period or there are no credits continuously for a period of 90 days, the Account will be classified as “Out of Order”. Therefore, as per the said Regulations, this will be reported as NPA by the Bank to the credit bureau(s). Classification of one account as NPA has an impact on the overall credit score and further all loans availed from RBL Bank would also be classified as NPA.
Hence, regular transaction(s) in the account is recommended in order to avoid reporting of the account as NPA as per the Regulation.
Kindly refer the below illustration, for better understanding:
| Quarter | Date | Interest Debits (Dr) | Credits (Cr) | Out of order (Cr < Dr) |
|
90 day period |
20-Aug-21 |
|
10,000 |
|
|
31-Aug-21 |
7,000 |
|
||
|
02-Sep-21 |
|
15,000 |
||
|
30-Sep-21 |
15,000 |
|
||
|
03-Oct-21 |
|
12,000 |
||
|
31-Oct-21 |
13,000 |
|
||
|
12-Nov-21 |
|
1,000 |
||
|
Example 1: Total |
|
35,000 |
38,000 |
No |
|
90 day period |
31-Aug-21 |
7,000 |
|
|
|
02-Sep-21 |
|
15,000 |
||
|
30-Sep-21 |
15,000 |
|
||
|
03-Oct-21 |
|
12,000 |
||
|
31-Oct-21 |
13,000 |
|
||
|
12-Nov-21 |
|
1,000 |
||
|
Example 2: Total |
|
35,000 |
28,000 |
Yes |
|
90 day period |
30-Sep-21 |
5,000 |
|
|
|
31-Oct-21 |
5,200 |
|
||
|
30-Nov-21 |
5,100 |
|
||
|
Example 3: Total |
|
15,300 |
0 |
Yes |
