whether installments of principal are overdue ornot.(2)
A cash credit hypothecation gets NPA status on thebasis of non operation in the account on the basisof continuous overdrawing above the sanctionedlimit.(3)
Banks get 30 days of time to term any interestdefault as past thereby due allowing lot of leveraged to postpone the date of accountbecoming NPA, thus an interest debit on 27.4.06and NPA on 27.10.06. this NPA would be reportedon 31.03.07.(4)
Similarly for cash credit hypothecation accountsmay get 2 quarters to avoid NPA status.(5)
While nonpayment of principal amount is notlinked to NPA status accreditation but forprovisioning requirement, assets classificationtakes care of overdoes in term loan accountExtent of provision depends on the age by whichaccount is NPA. An account gets doubtful assetcategory III status if it is NPA for more than 5years, requiring 50% if it is fully backed bysecurity.(6)
Linkage of extent of provision with the securitybacking of assets and DICGC coverage.(7)
Assets classification system, although basicallyintended for provisioning has got creditmanagement instinct.