What is NPA divergence rule?

RBI found Rs 3,277-cr divergence in NPA provisioning for FY19: YES Bank. If the divergence between what the RBI finds as gross non-performing assets (NPA) and what the bank reported is more than 15 per cent, the bank needs to disclose it to the public.

What are the guidelines issued by RBI for asset classification under NPA?

For the above category of banks, an account would be classified as Non Performing Asset if the : (i) Interest and/or installment of principal remain overdue for a period of more than 180 days in respect of a Term Loan. 4 Tier II banks shall classify their loan accounts as NPA as per 90 day norm as hitherto.

What happens if NPA is declared?

When a loan becomes an NPA, Non-Performing Asset, the bank has the right to confiscate the property or asset purchased through the loan. They can then auction the asset to pay against the loan outstanding.

When did RBI implement NPA guidelines?

With effect from 1st April 2000, advances sanctioned against State Government guarantees should be classified as NPA in the normal course, if the guarantee is invoked and remains in default for more than two quarters. With effect from March 31, 2001 the period of default is revised as more than 180 days.

What is RBI divergence?

Divergence takes place when the Reserve Bank of India (RBI) finds that a lender has under-reported (or not reported at all) bad loans in a particular year and hence asks the lender to make disclosures if under-reporting is more than 10\% of bad loans or the provisioning.

What are the privileges that are enjoyed by scheduled banks in India?

Benefits of being a scheduled bank under the Reserve Bank of India Act, 1934:

• Becomes eligible for debts/loans at the bank rate from the RBI.
• Automatically acquires the membership of clearing house.
• Rediscount of first class exchange bills from the RBI.

Which of the following is true about RBI?

It is not to compete with the commercial banks. It is not allowed to pay interest on its deposits. It cannot engage directly or indirectly in trade. It cannot also acquire or advice loans against immovable property.

What is divergence banking?

Divergence is when the price of an asset is moving in the opposite direction of a technical indicator, such as an oscillator, or is moving contrary to other data. Positive divergence indicates a move higher in the price of the asset is possible. Negative divergence signals that a move lower in the asset is possible.

What is provision coverage ratio?

Provision Coverage Ratio (PCR) = Provisions/Gross NPA A PCR of 70\% or more tells us that the bank is not at risk and the asset quality is taken care of. Also, the bank will be strong enough to withstand NPAs.