What is Special Mention Accounts (SMA)?
What is Special Mention Accounts (SMA)?


The RBI has implemented a regulatory norm for the early identification and reporting of  stress of loans under Special Mention Accounts. According to the RBI, the banks or lenders have to identify the incipient stress immediately after the default bunder different SMA categories. Specifically, the SMA is for early identification and reporting of stress or even before an account (loan account) turns NPA.

What is Special Mention Accounts?

Special Mention Accounts are those assets/accounts that shows symptoms of bad asset quality in the first 90 days itself.

What is the difference between NPA and SMA?

Remember that NPA has a duration of 90 days. On the other hand, the worst type of special mention account (SMA – 2) has less than 90 days’ duration.  

The Special Mention Account identification is an effort for early stress discovery of bank loans. It was introduced as a corrective action plan to contain stress. As per the SMA regulations, banks should identify potential stress in the account by creating a new sub-asset category viz. ‘Special Mention Accounts’ (SMA).

Classification of Special Mention Accounts

The SMA norm is important for resolution of stressed assets. Here, the status of a loan will be measured by the resolution officials by understanding SMA position. The RBI itself has given the SMA norm under its Framework for Resolution of Stressed Assets guidelines. As per the stressed asset framework, commercial bank shall report credit information, including classification of an account as SMA to Central Repository of Information on Large Credits (CRILC), on all borrowers having aggregate exposure of Rs 5 crore or more is recorded with.

The Special-Mention Accounts are usually categorized in terms of duration. For example, in the case of SMA -1, the overdue period is between 31 to 60 days. On the other hand, an overdue between 61 to 90 days will make an asset SMA -2. In the case of SMA -NF, non-financial indications about the stress of an asset are considered.

‘Special Mention’ category of assets are identified not only on the basis of non-repayment or overdue position but also due to other factors that reflect sickness/irregularities in the account (SMA -NF). There will not be any provisioning for SMA assets.

SMA Sub-Category Classification basis: Principal or interest payment or any other amount wholly or partly overdue between:
SMA-0 Principal or interest payment overdue up to 30 days.
SMA- 1 Principal or interest payment overdue between 31-60 days.
SMA – 2 Principal or interest payment overdue between 61-90 days.

Besides the above, the RBI has introduced another category known as SMA – NF       to express non-financial (NF) signals of stress. But that is not followed ardently by the RBI later. The SMA classification is applicable for all categories of loans except crop season based agricultural loans.

The classification of Special Mention Accounts (SMA) was introduced by the RBI in 2014, to identify early stress with respect to loans.  Logic of such a classification is because some accounts may turn NPA soon. Here, an early identification will help to tackle the problem better.

There will not be any particular provisioning for SMA assets.



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