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BOOKLET ON

NPA FUNCTIONALITY
IN B@NCS24



By

Loans Team,
State Bank of India,
Core Banking Project,
CBD Belapur, Navi Mumbai

BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
2


INDEX
FOREWORD........................................................................................................................................... 3
EXPLANATION OF THE TERMS USED IN THIS BOOKLET....................................................... 5


CHAPTER 1............................................................................................................................................. 6
CLASSIFICATION OF NPA IN B@NCS24.......................................................................................... 6


CHAPTER 2............................................................................................................................................. 7
ARREAR CONDITIONS ....................................................................................................................... 7


CHAPTER 3........................................................................................................................................... 11
ARREAR ACTION............................................................................................................................... 11


CHAPTER 4........................................................................................................................................... 12
NPA PROCESSING IN B@NCS24..................................................................................................... 12


CHAPTER 5........................................................................................................................................... 14
MENU NAVIGATION FOR NPA IN B@NCS24 ................................................................................ 14


CHAPTER 6........................................................................................................................................... 25
AMEND NPA STATUS ....................................................................................................................... 25


CHAPTER 7........................................................................................................................................... 32
GRANTING OF HOLIDAYS IN NPA TRACKING............................................................................. 32


CHAPTER 8........................................................................................................................................... 36
INCA / UIPY CALCULATION & ACCOUNTING IN B@NCS24 ...................................................... 36


CHAPTER 9........................................................................................................................................... 37
PROVISIONING IN B@ncs24............................................................................................................ 37









BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
3




CHAPTER 10......................................................................................................................................... 39
OTHER ASPECTS OF NPA................................................................................................................ 39

TRACKING OF NPA FOR DDP CHEQUES TRANSACTIONS......................................................... 39

TRACKING OF NPA FOR BILLS TRANSACTIONS.......................................................................... 40

TREATMENT OF NPA FOR ALL THE ACCOUNTS OF A CUSTOMER.......................................... 40

IN CASE ONE OF HIS ACCOUNTS IS NPA ..................................................................................... 40

PROTESTED BILLS AND RECALLED DEBTS ACCOUNTS............................................................ 40

STEPS FOR TRANSFER OF CC/OD ACCOUNTS TO PB/RD.......................................................... 42

STEPS FOR TRANSFER OF DL / TL TO PB / RD .......................................................................... 45

LEGAL CASE TRACKING.................................................................................................................. 49

DICGC / ECGC CLAIMS, SETTLEMENT AND APPROPRIATION................................................. 52

ECGC CLAIMS PROCESSING.......................................................................................................... 62

WRITE OFF........................................................................................................................................ 64

WRITE OFF WITH TRANSFER OF BALANCE TO AUC ACCOUNT .............................................. 69

REPORTS IN B@NCS24 FOR NPA................................................................................................... 73

FAQs ON NPA TRACKING................................................................................................................ 74


CHAPTER 11...................................................................................................................................... 78
NPA DATE.......................................................................................................................................... 78

CHAPTER 12...................................................................................................................................... 81
NPA CALCULATOR........................................................................................................................... 81



BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
4
FOREWORD

NPA Management has assumed greater significance due to stringent norms getting
introduced from time to time. Role of technology in helping the operating staff to
identify the NPA accounts and probable NPA accounts will go a long way in planning
proper strategy for addressing credit risks.
B@ncs24 supports the entire functionality of NPA. In our maiden attempt in making
available the entire gamut of NPA functionality through the system, B@ncs24 has
been customized to handle this complex functionality. All the conditions, which
trigger the NPA status of a particular loan account, have been built in the system, so
that each and every account is tracked on an on-going basis. NPA module in
B@ncs24 is designed to track on a daily basis and enable an up-to-date IRAC status
of Banks loan accounts to be obtained at any point.
B@ncs24 is designed to handle all the connected functionalities of NPA such as
passing of INCA / UIPY accounting entries, making Provision, stopping of interest
application in NPA accounts, maintaining DICGC/CGA Claims received for
appropriation, recovery in respect of NPA and finally write off / AUCA/ Compromise
of NPA.
In this booklet an attempt has been made to explain the above-mentioned features in
order to familiarize the users with this functionality. This compilation aims to equip
the Branch users with suitable tools to handle one of the most vital areas of asset
management through B@ncs24. I commend the efforts made by
Shri R. Lakshminarasimhan, Asstt. General Manager and members of the Core
Banking Project in bringing out this booklet which, I am sure will be found very
useful by the operating functionaries. Any suggestions for its improvement may
please be sent to the Development Team at Core Banking Project (E-mail Id
lakshminarasimhan.r@sbi.co.in).

STATE BANK OF INDIA U.S. ROY
CORE BANKING PROJECT CHIEF GENERAL MANAGER
CBD BELAPUR
25.11.2004

BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
5
EXPLANATION OF THE TERMS USED IN THIS BOOKLET


TERMINOLOGY USED


MEANING

Risk Grade IRAC Status
Bad Debt Indicator IRAC Status
Arrears Overdues / Irregularity
Loans CC / OD / DL / TL
Old IRAC Status Confirmed NPA Status of the account
New IRAC Status Indicative NPA Status of the account
INCA Interest Not Collected Account
UIPY Unrealised Interest of Previous Years
SCR NO. Screen Number
Prompt Screen
Screen for inputting account number /
CIF number and action
Return Screen
The screen that is displayed by B@ncs24
after transmitting Prompt Screen
System (as shown in many of
the screens of B@ncs24)
Various modules in B@ncs24
DEP CC / OD accounts (Deposit Module)
LON DL / TL accounts (Loans Module)
CRA Credit Risk Assessment
Old Bad Debt Indicator Old IRAC Status
New Bad Debt Indicator New IRAC Status
AUCA Advances Under Collection Account
(Bad Debt Indicator, IRAC Status and Risk Grade have the same meaning and are used interchangeably in the system)
BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
6

CHAPTER 1
CLASSIFICATION OF NPA IN B@NCS24


Non-Performing Assets in B@ncs24 have been classified into 7 categories, which are
called as RISK GRADES as per details below:-



RISK
GRADE

DESCRIPTION

00 Standard Asset
01 Standard But Temporarily Irregular Asset
02 Standard But Irregular for Over 60 Days
04 Sub-Standard Asset
05 Doubtful Asset Less than 1 Year
06 Doubtful Asset = > 1 Year but < 3 Years
07 Doubtful Asset = > 3 Years
08 Loss Asset
(Please note that risk grade numbers 03 and 09 are not used presently)







BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
7

CHAPTER 2
ARREAR CONDITIONS


Various conditions that make a loan account to slip from the status of Standard Asset are
getting tracked in B@ncs24. These are called ARREAR CONDITIONS. In other
words all the NPA business rules are defined in the system at every RISKGRADE of the
CC/OD/DL/TL accounts. For example, Cash Credit or Overdraft account running
continuously irregular for over 90 days has to be classified as Sub-standard Asset. In the
given example, Account running irregular for 90 days is referred as an Arrear
Condition. To explain this further, when an account is in Sub-Standard asset for Over 1
year, the same has to be classified as Doubtful Asset Category I. Here Account staying
in a particular category of asset for over 1 year is the Arrear Condition. These Arrear
conditions are defined in the system for various RISKGRADES and are assigned with
specific numbers. Therefore, whenever the system has categorized an asset to a
particular NPA status, user can find out which arrear condition has triggered the
deterioration so that he can initiate remedial measures. We furnish below the details of
the Arrear Conditions defined for CC/OD accounts and DL/TL accounts. Since system
will refer these Arrears Conditions only by the number, user is expected to use this
booklet for finding the details. If continuous irregularity in the account has triggered the
NPA status, user can take up for regularizing the account. In case non-submission of
stock statement has triggered the NPA status, user can approach the borrower for
submission of stock statement. Always, the user has to relate the arrear condition to a
given Risk Grade of the account.





BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
8
ARREAR CONDITIONS FOR CASH CREDIT AND OVERDRAFT ACCOUNTS

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201 00 Excess Drawings / Irregularity 30 Days 01
202 01 Excess Drawings / Irregularity 30 Days 02
203 02 Excess Drawings / Irregularity 30 Days 04
204 00 Interest not Serviced 30 Days 01
205 01 Interest not Serviced 30 Days 02
206 02 Interest not Serviced 30 Days 04
207 00 Non submission of Stock Statement 90 Days 04
208 01 Non submission of Stock Statement 90 Days 04
209 02 Non submission of Stock Statement 90 Days 04
210 00 Non submission of Renewal Data 180 Days 04
211 01 Non submission of Renewal Data 180 Days 04
212 02 Non submission of Renewal Data 180 Days 04
213 00 Erosion in Security Value 90.10% 08
214 01 Erosion in Security Value 90.10% 08
215 02 Erosion in Security Value 90.10% 08
216 04 Erosion in Security Value 90.10% 08
217 05 Erosion in Security Value 90.10% 08
218 06 Erosion in Security Value 90.10% 08
219 07 Erosion in Security Value 90.10% 08
220 04 Erosion in Security Value 50.10% 05
221 01 Auto Upgrade -- 00
222 02 Auto Upgrade -- 00

BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
9
In the given example, Arrear Condition 201 is operational only when the Cash
Credit or Overdraft account is in Risk Grade 00. This arrear condition indicates that if
the account is irregular that is over and above DP for 30 days, then the NPA status of that
account will be converted to Risk Grade 01, which is Standard but irregular for over 30
days. The other arrear conditions need to be understood in the same manner. Arrear
Condition No. 221 and 222 are covered in a separate chapter.

ARREAR CONDITIONS FOR DEMAND / TERM LOAN ACCOUNTS

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101 00 Excess Drawings / Irregularity 30 Days 01
102 01 Excess Drawings / Irregularity 30 Days 02
103 02 Excess Drawings / Irregularity 30 Days 04
104 00 Erosion in Security Value 90.10% 08
105 01 Erosion in Security Value 90.10% 08
106 02 Erosion in Security Value 90.10% 08
107 04 Erosion in Security Value 90.10% 08
108 05 Erosion in Security Value 90.10% 08
109 06 Erosion in Security Value 90.10% 08
110 07 Erosion in Security Value 90.10% 08
111 04 Erosion in Security Value 50.10% 05
112 01 Auto Upgrade -- 00
113 02 Auto Upgrade -- 00

There are certain Arrears Conditions, which are common to both CC/OD and
DL/TL accounts. These Arrears Conditions are called as Common Conditions, details
of which are furnished below:
BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
10

COMMON ARREAR CONDITIONS

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151 04 Risk Grade (4) 365 days 05
152 05 Risk Grade (5) 365 days 06
153 06 Risk Grade (6) 730 days 07

Common arrear conditions are based on time factor. If an account is classified as
Substandard and is remaining in the same stage for 1 year, then the IRAC status of that
account need to be reclassified as Doubtful Asset-Category 1. This business rule is
getting addressed through Arrear Condition Number 151.

In all, we have seen 38 Arrear Conditions defined in B@ncs24 as at present.






BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
11

CHAPTER 3
ARREAR ACTION

In the earlier Chapter, we have seen the Arrear Conditions defined in the system. All
these Arrear Conditions trigger what is called the ARREAR ACTION. Arrear actions
are detailed below:-

ACTION
NO.
DESCRIPTION
100 CHANGE TO RISK GRADE 0
101 CHANGE TO RISK GRADE 1
102 CHANGE TO RISK GRADE 2
104 CHANGE TO RISK GRADE 4
105 CHANGE TO RISK GRADE 5
106 CHANGE TO RISK GRADE 6
107 CHANGE TO RISK GRADE 7
108 CHANGE TO RISK GRADE 8


For example, Arrear Condition No. 153 is attached with Action No. 107. Arrear
Condition 153 indicates the continuous stay of an Account in IRAC Status Doubtful
Assets Category 2 (Risk Grade 06 in B@ncs24) will initiate Arrear Action No. 107
which is nothing but changing the status of that account to Doubtful Asset Category 3
(Risk Grade 07 in B@ncs24).




BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
12
CHAPTER 4
NPA PROCESSING IN B@NCS24

Each and every loan account is processed by the system during End of Day process
(EOD) for deciding the NPA status. The Arrear Condition and the Arrear Action
explained in the previous chapters are used by the system in determining the Risk Grade
of an account. The Risk Grade thus decided by the system is shown as NEW IRAC
STATUS. Every loan account in B@ncs24 has two risk grades as detailed below

1. NEW IRAC STATUS

This is an indicative status of a loan account as processed by the system. It is
purely system generated based on the Arrears Conditions. NPA processes
such as stopping of interest application, segregation of INCA / UIPY, etc. will
not happen based on the Risk Grade shown under New IRAC Status. This
requires a confirmation from the operating staff. The confirmed status
happens both by manual intervention and End of Year (EOY) process.

2. OLD IRAC STATUS

This is the actual IRAC status of a loan account. The New IRAC status is
confirmed by the operating staff during year-end or any time during the year.
The confirmed status is reflected under the column OLD IRAC STATUS.
Therefore, for all purposes of finding the NPA status of an account, the user
has to refer only this column. The system starts the NPA processes such as
non-application of interest and segregation of INCA / UIPY automatically.
Rate of Interest in the loan account is not going to be zeroised upon the status
change to 04 or above. Interest accruals will continue in the loan account
but the same will not be applied to the account. The user thus can ascertain
the interest accruals (on simple interest basis) in respect of NPA accounts at
any point of time.
BOOKLET ON NPA FUNCTIONALITY IN B@NCS24

State Bank of India, Core Banking Project, Corporate Centre, CBD Belapur.
For internal circulation only
13

Both the NEW IRAC STATUS and the OLD IRAC STATUS can be changed by the
user. While doing so, the user is expected to verify the arrear condition, which has
triggered the NEW IRAC STATUS, and take appropriate action before manually
changing it.

AUTO UPGRADATION

Risk Grades 00, 01 and 02 are Standard Assets. In order to help the users to initiate
remedial action, standard assets, which are irregular for over 30 days and over 60 days
have been, classified under 01 and 02 respectively. In any of these stages if the account
becomes regular, the system automatically upgrades that particular account to Risk Grade
00 and continues the monitoring once again. Thus, an account, which is in 01 and 02
category, upon regularization, will be classified as 00 (Standard) by the system.

However, when an account slips to any other category such as Risk Grade 04 or 08, the
system will not automatically upgrade it to 00 Standard even if the irregularity is
rectified. Manual intervention is required in this case.