RBI/2013-14/414
DBOD.No.BP.BC.78/21.04.048/2013-14
December 20, 2013
The Chairman and Managing Director/
Chief Executive Officer of
All Scheduled Commercial Banks
Dear Sir,
Prudential Norms on Income Recognition, Asset Classification and
Provisioning pertaining to Advances – Credit Card Accounts
Please refer to
paragraph 2.1 of
the Master Circular dated July 01, 2013 on Prudential Norms on Income
Recognition, Asset Classification and Provisioning pertaining to
Advances, wherein definitions of non-performing assets (NPAs) have been
indicated.
2. In credit card accounts, the amount spent is billed to the card
users through a monthly statement with a definite due date for
repayment. Banks give an option to the card users to pay either the full
amount or a
fraction of it, i.e., minimum amount due, on the due date
and roll-over the balance amount to the subsequent months’ billing
cycle.
3. It has come to our notice that there are divergent practices being
followed by banks with regard to asset classification status of credit
card accounts if minimum amount due is not paid on the specified due
date. While some banks reckon the due date specified in the statement
for payment of minimum amount due to determine the over-due status, some
banks reckon the subsequent billing date to determine the over-due
status of the minimum amount due. In order to bring in consistency and
induce transparency, it is advised that a credit card account will be
treated as non-performing asset if the minimum amount due, as mentioned
in the statement, is not paid fully within 90 days from the next
statement date. The gap between two statements should not be more than a
month.
4. Banks should follow this
uniform method of determining over-due status for credit card accounts
while reporting to credit information companies and for the purpose of
levying of penal charges, viz. late payment charges, etc., if any.
Yours faithfully,
(Chandan Sinha)
Principal Chief General Manager