ANNEXURE
From:
1. M/s Paisalo Digital Limited, Having its Registered office at 101,CSC, Pocket-52,
Cittaranjan Park, Near Police Station, New Delhi-110019, Represented by its Authorised
Signatory
2. Mr. Sunil Agarwal S/o Purushottam Agarwal, Residing at S-383, Second Floor,
Greater Kailash Part- II, New Delhi-110048.
3. Mr. Sachin Agarwal S/o Purushottam Agarwal, Residing at M-163, Block- M, G K -2,
Greater Kailash, South Delhi, Delhi – 110048.
4. M/s Prabhuji Technicals Private Limited, having its Registered office at 322A,
Shop 1, Sant Nagar, East of Kailash, New Delhi-110065. Represented by its Authorized
Signatory
5. M/s Natansh Retail Plaza Private Limited, having its Registered office at DPT-
103, Prime Towers, Okhla Phase-I, South Delhi, Delhi – 110020. Represented by its
Authorised Signatory
6. M/s. Samast Vikas Limited, Having its Registered office at DPT-103, Prime Towers,
Okhla Phase-I, South Delhi, Delhi– 110020. Represented by its Authorised Signatory
7. M/s Super King Investments Private Limited, having its Registered office at 59-
A/19, Plot No-44, Ground Floor, Gali No. 3, Guru Nanak Pura, Laxmi Nagar East Delhi,
Delhi - 110092.
Represented by its Authorised Signatory
8. M/s Ujala Arcade Private Limited, Having its Registered office at DPT-103, Prime
Towers, Okhla Phase-I, South Delhi – 110020. Represented by its Authorised Signatory
To:
The Branch Head,
Karnataka Bank Ltd,
Corporate Finance Branch
Connaught Place, Delhi
Dear Sir/Madam,
With reference to the Credit facility/ies sanctioned to me/us vide sanction
Letter ref No: EDS(CSD) 43/2023-24 dated 30.03.2024 and being
availed by us today. I/we confirm having understood the following concepts
and illustrative examples related to due dates, classification of our borrowal
accounts as SMA/NPA in the course of the conduct of the accounts.
Concepts/clarifications/Illustrative examples on due dates and
specification of SMA/NPA classification dates.
Dues:
mean, the principal/interest/ any charges levied on the loan account which
are payable within the period stipulated as per the terms of sanction of the
credit facility.
Overdue:
mean, the principal / interest/ any charges levied on the loan account which
are payable, but have not been paid within the period stipulated as per the
terms of sanction of the credit facility. In other words, any amount due to the
bank under any credit facility is “overdue” if it is not paid on the due date
fixed by the bank.
Continuation of
Annexure
Relevance of the Principle of “First In First Out” (FIFO) in
appropriation of
payments into the borrowal account:
The Principle of FIFO i.e., “First In, First Out” accounting method is relevant
to arrive at the No. of days of overdue for determining the SMA/NPA status.
The FIFO principle assumes that, the oldest outstanding dues in the loan
account needs to be cleared first .The FIFO method thus requires that what is
due first must be paid by the borrower first.
For example;
If in any loan account as on 01.02.2021 there are no overdues and an
amount of ₹ X is due for payment towards principal
instalment/interest/charges, any payment being credited on or after
01.02.2021 in the loan account will be used to pay off the dues outstanding
on 01.02.2021.
Assuming that nothing is paid /or there is partial payment (₹ Y) of dues
during the month of February, the overdue as on 01.03.2021 will be ₹ X-Y.
Additionally, an amount of ₹ Z becomes due as on 01.03.2021, now any
payment/partial payment into the account on or after 01.03.2021 will be first
utilized to pay off the partial due of 01.02.2021 (₹ X - ₹ Y). If there is more
recovery than the ₹ X - ₹ Y then after recovering dues of 01.02.2021, the
remaining amount will be treated as recovery towards due of 01.03.2021.
Age of oldest Dues:
The age of oldest dues is reckoned in days from the date on which the oldest
payment is due and continues to remain unpaid. In the aforesaid illustration,
if the Dues relating to 1st February 2021 remain unpaid till 01.03.2021, the
age of the oldest dues is reckoned as 29 days on 02.03.2021.
Classification as Special Mention Account (SMA) and Non-Performing
Asset (NPA).
Bank will recognize the incipient stress in loan accounts, immediately on
Default, by classifying them as Special Mention Accounts (SMA). The basis of
classification of SMA /NPA Category shall be as follows:
2
Continuation of
Annexure
Loans in the Nature of Loans in the Nature of Cash
Credit/Overdraft
DPN/Term Loans
Basis for SMA Sub Basis for classification-
Outstanding
SMA Sub- classificatio – categories balance remains continuously
n in
categories Principal or excess of the sanctioned limit
Interest or
paymen or any drawing power whichever is
t lower
other amount for a period of
wholly or partly
overdue
SMA-O Upto 30
days
SMA-1 More than 30 SMA-1 More than 30 and upto 60
days days
and upto 60 days days
SMA-2 More than 60 SMA-2 More than 60 and upto 90
days days
and upto 90 days days
Note: The asset classification norms of Agricultural advances which are
based on Crop Season shall continue as hitherto.
Non-performing Asset:
Non-Performing Asset (NPA) is a loan or an advance where:
i. Interest and/ or instalment of principal remains overdue for a period of
more than 90 days in respect of a term loan,
ii. The account remains “out of order” as indicated below, in respect of an
Overdraft/Cash Credit (OD/CC),
iii. The bill remains overdue for a period of more than 90 days in the case of
bills purchased and discounted,
iv. The instalment of principal or interest thereon remains overdue for two
crop seasons for short duration crops,
v. The instalment of principal or interest thereon remains overdue for one
crop season for long duration crops.
Out of Order Status:
An account shall be treated as 'out of order' if:
i. The outstanding balance in the CC/OD account remains continuously
in excess of the Sanctioned limit/drawing power for 90 days, or
ii. The outstanding balance in the CC/OD account is less than the
sanctioned limit/drawing power but there are no credits continuously
for 90 days, or the outstanding balance in the CC/OD account is less
than the sanctioned limit/drawing power but credits are not enough to
cover the interest debited during the previous 90 days period.
3
Continuation of
Annexure
Illustrative movement of an account to SMA category to NPA
category based on delay/non-payment of dues and subsequent
upgradation to Standard category at day end process:
4
Continuation of
Annexure
We also understand that the aforesaid few examples are illustrative and not
exhaustive in nature covering common scenarios, and that, the IRACP norms
and clarifications provided by RBI on the subjects referred above will prevail.
Yours faithfully,
(Borrower/s/ Guarantor/ Co-Obligants)
Date: New Delhi
Place:
