Learn / Regulation
RBI's 12 November 2021 circular on NPA classification: what it clarified
On 12 November 2021 the RBI issued a circular titled 'Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances - Clarifications' (RBI/2021-2022/125). It did not change the 90-day rule. It removed room for interpretation. Many internal definitions were rewritten after it.
What it clarified
- Overdue: an amount is overdue when it is not paid on the due date set by the lender. The due dates must be stated in the loan agreement.
- Out of order: for CC and OD accounts, the account is out of order if the balance stays above the limit or drawing power for 90 days, or if there are no credits for 90 days, or credits do not cover the interest debited in the previous 90 days.
- SMA: the categories apply to all loans, retail included, with the day ranges listed in the SMA guide.
- Upgradation: an NPA moves back to standard only when all arrears of interest and principal are paid. Paying interest alone, or part of the overdue, is not enough.
What a data team should check
- Does your due date come from the agreement, or from a system default?
- Is DPD counted on the oldest unpaid due date?
- Does a part payment leave the account NPA?
- Do CC and OD accounts use the out-of-order test and not instalment DPD?
- Does your upgrade flag need all arrears cleared?
Timelines and later changes
Different paragraphs took effect on different dates. The 90-day interest rule for NPAs applied from 31 March 2022. The RBI later gave extra time on some parts and has reorganised its instructions since, so confirm which text applies to your lender type before you rely on this summary.
Always paste the circular yourself
When you ask an AI tool to build a rule from a circular, paste the current text into the prompt. Do not rely on the tool to recall it. A rule remembered from last year is the usual cause of a wrong NPA flag.
Try it on your own tables
The free tools give you the prompt, the checks and how to present the result. You enter table names only.
See the free toolsFrequently asked questions
What did the RBI circular of 12 November 2021 say?
It clarified how overdue, out of order, SMA categories and NPA upgradation are applied, in the circular RBI/2021-2022/125 on prudential norms for income recognition, asset classification and provisioning.
Did it change the 90-day NPA rule?
No. The 90-day test stayed. The circular made the application of the rule more explicit.
Is this the latest RBI text on NPA classification?
Not necessarily. The RBI has revised and consolidated its instructions over time. Check the current directions for your type of lender.
Keep reading
NPA classification: the 90-day rule and the asset categories
When does a loan become an NPA? The 90-day rule, how term loans and cash credit differ, the asset categories, and what it takes to upgrade an account.
RegulationSMA-0, SMA-1 and SMA-2 explained with a worked example
SMA categories are RBI's early-warning labels for stressed loans before they turn NPA. See the day ranges, a dated example, and how revolving accounts differ.