Banks will make 10 major changes to identify NPA

To reduce the burden of NPAs and bad spending on banks, RBI has directed to make several changes. The Reserve Bank has issued a notification on Monday asking for a digital mechanism to identify the provision or risky debt by June 30, 2021. As per the directive, functioning in many areas including debt and transaction data will have to be improved.

For identification and classification of risky assets (NPAs), accounts of all types of borrowers should be linked to the IT-system. This should include account holders availing temporary overdraft facility and also the area and their loan limit.

Property classification rules should be implemented in the system, so that regulatory instructions can be followed.

For the calculation of NPA also various assets will be assessed on system based data. The rules issued from time to time also have to be enforced by automatic route.

If money is required from the income account to compensate for the NPA, then it will be transferred by a system based without human intervention.

The banks’ automatic technical system will evaluate both the declines and the increases in the account without any human intervention. This will show the strength and weakness of an account, which will help in early identification of NPAs.

Banks will have to update the asset classification data daily and present the point-wise data related to the NPA sought at any time along with the actual date.

Under special circumstances the minimum and temporary concessions given to an account will also have to be implemented through the system.

If human intervention is necessary to override the system classification in an extraordinary situation, an investigation must be made at least two levels to implement it.

For any emergency situation, banks will maintain an account of these information for at least three years and during this time there will not be any tampering.

Banks will share all the data related to provisioning and NPA with the central banking system and will be able to collect data from there on need.