NBFC Rates for standard, substandard, doubtful asset

Raju Choudhary

Staff member
Hi Rounak Please check following details

Provisioning for Standard Assets
The provision for standard assets for NBFCs-ND-SI and for all NBFCs-D has being increased to 0.40% (at present 0.25%). The compliance to the revised norm will be phased in as given below:
  • 0.30% by the end of March 2016
  • 0.35% by the end of March 2017
  • 0.40% by the end of March 2018
The provisions on standard assets should not be reckoned for arriving at net NPAs. The provisions towards Standard Assets need not be netted from gross advances but shown separately as 'Contingent Provisions against Standard Assets' in the balance sheet. Also, NBFCs are allowed to include the ‘General Provisions on Standard Assets’ in Tier II capital which together with other ‘general provisions/ loss reserves’ will be admitted as Tier II capital only up to a maximum of 1.25 per cent of the total risk-weighted assets.

Sub-standard asset
A general provision of 10% of total outstanding shall be made.

Loss Assets

The entire asset shall be written off. If the assets are permitted to remain in the books for any reason, 100% of the outstanding should be provided for

Doubtful Assets
(a) 100% provision to the extent to which the advance is not covered by the realisable value of the security to which the NBFC has a valid recourse shall be made. The realisable value is to be estimated on a realistic basis.

(b) In addition to item (a) above, depending upon the period for which the asset has remained doubtful, provision to the provision to the extent of 20% to 50% of the secured portion (i.e. estimated realisable value of the outstanding) shall be made on the following basis : -

Upto one year - 20%
One to three years - 30%
More than three years - 50%
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