Duration of application of extant penal provisions (5% in case of Standard account and accelerated provision in case of NPAs)

Duration of application of extant penal provisions (5% in case of Standard account and accelerated provision in case of NPAs)

Penal provisions are applicable under certain cases vide circular DBOD.BP.BC.No.97/21.04.132/ 2013-14 dated February 26, 2014. While the duration of such penal provision has been specified in case of an escrow account maintaining bank which does not appropriate proceeds of repayment by the borrower among the lenders as per agreed terms resulting into down gradation of asset classification of the account in books of other lenders, the duration has not been prescribed in other cases. Banks are advised that the penal provisions in the other cases under the Framework will be applicable for the following durations:

Sl. No.	Reason for Penal Provision	Duration
(i)	Banks fail to report SMA status of the accounts to CRILC or resort to methods with the intent to conceal the actual status of the accounts or evergreen the account.	From the date of imposition of penal provision as advised by RBI Inspection/Statutory Auditor till one year or rectification of defect, whichever is later.
(ii)	Lenders who have agreed to the restructuring decision under the CAP by JLF and are signatories to the ICA and DCA, but change their stance later on, or delay/refuse to implement the package.
(iii)	Lenders fail to convene the JLF or fail to agree upon a common CAP within the stipulated time frame.
(iv)	Accelerated provision for existing loans/exposures of banks to companies having director/s (other than nominee directors of government/financial institutions brought on board at the time of distress), whose name/s appear more than once in the list of wilful defaulters.	From the date of notification as wilful defaulter in the list of wilful defaulters till the removal of the name from the list.

Sl. No.

Reason for Penal Provision

Duration

(i)

Banks fail to report SMA status of the accounts to CRILC or resort to methods with the intent to conceal the actual status of the accounts or evergreen the account.

From the date of imposition of penal provision as advised by RBI Inspection/Statutory Auditor till one year or rectification of defect, whichever is later.

(ii)

Lenders who have agreed to the restructuring decision under the CAP by JLF and are signatories to the ICA and DCA, but change their stance later on, or delay/refuse to implement the package.

(iii)

Lenders fail to convene the JLF or fail to agree upon a common CAP within the stipulated time frame.

(iv)

Accelerated provision for existing loans/exposures of banks to companies having director/s (other than nominee directors of government/financial institutions brought on board at the time of distress), whose name/s appear more than once in the list of wilful defaulters.

From the date of notification as wilful defaulter in the list of wilful defaulters till the removal of the name from the list.