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ICICI Securities Report
The Reserve Bank of India has issued clarification with respect to queries raised on the implementation of revised asset classification and provisioning norms.
Firstly, it clearly states that circular issued does not, in any way, interfere with the extant guidelines on implementation of India-Accounting Standard by non banking financial companies.
It means the provisioning need not necessarily hit profit and loss and stage-III can be disclosed distinctly from gross non-performing assets. Also, RBI has given time to NBFCs till September 30, 2022 to implement the provision on upgradation of non-performing asset to standard assets (only after entire arrears of interest and principal are paid).
Positively, additional provisioning that was expected in Q4 FY22 for some entities (namely Mahindra and Mahindra Financial Services Ltd., LIC Housing Finance Company Ltd.) will not be required now with the clarification being issued by the RBI.
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