RBI vide its notification dated 21 August 2020, has issued certain instructions and guidelines to all the banks to be followed while governing the process of ad hoc/short review/renewal of the credit policy which are as follows:
- Banks, Scheduled Commercial Banks (SCBs) should have a board approved credit policy prescribing the periodicity, methodology and differential time schedules of review/renewal of credit facilities with the regulatory guidelines.
- An account where the regular or ad-hoc credit limits have not been reviewed or renewed within the stated timeline from the due date or date of adhoc sanction will be treated as an NPA (Non-Performing Asset).
- There should be a timely and comprehensive review or renewal of credit facilities and credit risk management framework, and banks should avoid recurring and repeated review or renewal of credit facilities without justifiable reasons.
- To collect data relating to regular as well as ad-hoc/short review/renewal of credit facilities in their banking systems or information systems and make it available for scrutiny as and when required by Auditors or RBI.
The notification can be accessed from here.