RBI in its circular released in Nov’16 and Dec’16 provided additional 90 day dispensation before
classifying an asset as NPA on Nov’16 and Dec’16 overdue accounts (in effect upto 180 days) .
If they choose to take path of RBI dispensation, it means they cannot recognize their NPA on Nov’16 and Dec’16 overdue accounts for 6 months
Nov Account --> Till May
Dec Acc -- > Till June
That suggest they have NPA in the books at 3.7% if they choose not to go with RBI dispensation.
Read this v carefully,
For Affected states, they declared 10% on group loan and 20% on Individual loans as NPA despite RBA dispensation scheme to classify them as standard asset. So this suggest more issues on NPA side with individual loan than on group lending,
For affected states, they use RBI dispensation as follows,
Out of group lending provisions they are not recognizing 90% of provisions yet as NPA. They call it as part of standard asset as they are hopeful they get repayments with lag.
Out of individual lending provisions they are not recognizing 80% of provisions yet as NPA. They call it as part of standard asset as they are hopeful they get repayments with lag.
Cases prior to Nov, Dec 2016, they have declared provision as per the provisioning policy. Check last quarter q3 presentation. They chose to declare them as NPAs in Q3 as per my knowledge. I could be wrong.
In Q4, where they have not received repayments past 90 days they raised them as NPAs (Provisioned) to 50% Remaining 50% provisions they will carry forward as standard asset. However, if they will not receive repayments in next quarter for Q4, then they will be declared as NPAs.
From Mgmt guidance, 2 more quarters could get affected. They are conservative mgmt and I expect only next quarter to have more NPAs before story gets better.
Hang on if you can till next quarter and hopefully you will see a sharp V shaped recovery unless Modi ji throws another Demo.