20 Prudential Norms
(1) Every Nidhi shall adhere to the prudential norms for revenue recognition and classification of assets in respect of mortgage loans or jewel loans as contained hereunder.
(2) Income including interest or any other charges on non-performing assets shall be recognised only when it is actually realised and any such income recognised before the asset became non-performing and which remains unrealised in a year shall be reversed in the profit and loss account of the immediately succeeding year.
(3) (a) In respect of mortgage loans, the classification of assets and the provisioning required shall be as under:
| Nature of Asset |
Provision Required |
| Standard Asset |
No provision |
| Sub-Standard Asset |
10% of the aggregate outstanding amount
|
| Doubtful Asset |
25% of the aggregate outstanding amount
|
| Loss Asset |
100% of the aggregate outstanding amount
|
Provided that a Nidhi may make provision for exceeding the percentage specific herein.
(b) The estimated realisable value of the collateral security to which a Nidhi has valid recourse may be reduced from the aggregate outstanding amount, if the proceedings for the sale of the mortgaged property have been initiated in a court of law within the previous two years of the interest, income or instalment remaining unrealised.
(4) In case of companies which were incorporated on or before 26-07-2001, such companies shall make provisions in respect of loans disbursed and outstanding as on 31-03-2002 for income reversal and non-performing assets as per table given below:
| For the year ended |
Extent of provision |
| 31-03- 2015 |
Un-provided balance on equal basis over the three years as specified in the preceding column. |
| 31-03- 2016 |
| 31-03- 2017 |
(5) (a) The Notes on the financial statements of a year shall disclose-
(i) the total amount of provisions, if any, to be made on account of income reversal and non-performing assets remaining unrealised;
(ii) the cumulative amount provided till the previous year;
(iii) the amount provided in the current year; and
(iv) the balance amount to be provided.
(b) Such disclosure shall continue to be made until the entire amount to be provided has been provided for.
(6) In respect of loans against gold or jewellery-
(a) the aggregate amount of loan outstanding against the security of gold or jewellery shall either be recovered or renewed within three months from the due date of repayment;
(b) if the loan is not recovered or renewed and the security is not sold within the aforesaid period of three months, the company shall make provision in the current year’s financial statements to the extent of unrealised amount or the aggregate outstanding amount of loan including interest as applicable;
(c) no income shall be recognised on such loans outstanding after the expiry of the three months period specified in (a) above or sale of gold or jewellery, whichever is earlier; and
(d) the loan to value ratio shall not exceed 80 percent.
Explanation.- For the purposes of this rule, the term ‘loan to value ratio’ means the ratio between the amount of loan given and the value of gold or jewellery against which such loan is given. |