1 National Conference on Bank Audit “IRAC NORMS”

Transcript:1 National Conference on Bank Audit “IRAC NORMS”:
1 National Conference on Bank Audit “IRAC NORMS” Friday, 28th March 2025 Organised by : PDC, ICAI Hosted by : Indore Branch of CIRC of ICAI 2 The views expressed in this presentation are my personal views and should not be construed to be the views of either the ICAI or my firm Agarwal & Saxena, Chartered Accountants. These views do not and shall not be considered as a professional advice. No part of this presentation maybe reproduced or copied in any form or by any means without my written permission. DISCLAIMER 3 AGENDA 1. Introduction 3. Case Studies relating to IRAC norms 2. IRAC Norms (including Agricultural Advances) 4 Identification of NPA’s in terms of RBI Norms 5 RBI issued MC on 02nd April 2024 again, however, there were no important changes compared to the MC issued on 01st April 2023. RBI Master Circular of 02nd April 2024 on IRAC norms “Any asset which has ceased to generate income” (for the bank!!) 6 What is an NPA? 7 RECORD OF RECOVERY Availability of Security Subjective conditions Thumb Rule for NPA’s AND NOT 8 Classification of NPA and SMA has to be done as part of “day end process”. SMA/ NPA date shall be the CALENDAR DATE for which “day end” process is run System identified SMA/ NPA dates (Look out for “delays” vide manual intervention/ evergreening processes) Date when an account should be classified as SMA/ NPA ? Interest and/ or instalment remains overdue for more than 90 days in respect of Term loans. (01.01.2025) Account remains “Out of order” for 90 days in respect of an OD/ CC. (1.1.25 to 31.3.25) 9 NPA – When ? Bill remains overdue for more than 90 days in the case of BP/BD. Principal/ Interest- overdue for a period of more than 90 days in respect of “any” other account Interest/Principal remains overdue for two/one Crop seasons- Short/Long duration crops 10 NPA – When ? When outstanding balance remains continuously in excess of the sanctioned limit/ drawing power FOR 90 DAYS OR When although o/s bal in “CC/OD” is less than sanctioned limit/ DP - No credits continuously FOR 90 DAYS OR Credits during the period of 90 days are not enough to cover the interest debited during the previous 90 days period A C B Either of the three conditions are satisfied 11 CC/ OD “Out of order” “Out of Order”