The Reserve Bank of India (RBI) relaxed the new prudential norms for all lenders, including shadow banks, by extending the time till September 2022 to apply the guidelines regarding upgrading the NPA account as standard but after clearing all dues. In a notice issued on 12th November 2021, RBI had given time till December 31, 2021, to enforce all the new prudential norms.

In a revised circular issued on Tuesday, the RBI said, “the new circular does not interrupt with the extant guidelines on the implementation of Ind-AS by NBFCs loan accounts classified as NPAs which should be upgraded as ‘standard’ asset only if the borrower pays the entire arrears of interest and principal. And NBFCs will have time till September 30, 2022, to place the necessary systems to implement this provision.”

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This new notice was issued after the central bank saw that some lenders upgraded NPA accounts to standard on payment of only interest overdue, partial overdue, etc. “To avoid any confusion in this regard, it is clarified that loan accounts classified as NPAs may be upgraded like a standard account only if the borrower pays the entire arrears of interest and principal,” the RBI said.