Base Layer NBFCs (assets below ₹1,000 crore) must now classify advances as Non-Performing Assets when they are overdue for more than 90 days — not 120 days. This is not a proposal. It is in force. Boards that have not approved updated credit and provisioning policies are already non-compliant.
What the Glide Path Was — and Where It Ends
RBI introduced the Scale-Based Regulation framework in October 2022. One of its central harmonisation objectives was to align NPA classification norms across all NBFC categories. Prior to SBR, non-systemically important, non-deposit-taking NBFCs — now classified as Base Layer — classified advances as NPA only when overdue for more than 180 days. The SBR framework set a glide path to bring this in line with the 90-day norm applicable to Middle and Upper Layer entities.
| Deadline | NPA Threshold | Status |
|---|---|---|
| Pre-SBR (before Oct 2022) | 180 days overdue | Superseded |
| March 31, 2024 | 150 days overdue | Completed |
| March 31, 2025 | 120 days overdue | Completed |
| March 31, 2026 | 90 days overdue | NOW IN FORCE |
What Actually Changes for a Base Layer NBFC
The shift from 120 to 90 days is not merely an accounting adjustment. It cascades through credit policy, provisioning, portfolio reporting, Board MIS, DNBS returns, and CIC reporting. Every system that references NPA classification — your LMS, your RBI returns module, your credit monitoring dashboards — must reflect the new threshold.
The Board-approved credit policy must explicitly state the 90-day NPA classification norm. Policies that still reference 120 days or the earlier 180-day norm are non-compliant and will be flagged in RBI inspections.
Accounts that were "standard" at 91-120 days overdue will now be classified as Sub-Standard. This increases provisioning requirements — 15% on secured sub-standard assets, 25% on unsecured. NBFCs with high-DPD portfolios will see immediate P&L impact.
NPA status must be reflected in credit information submissions to all four CICs. Accounts reclassified as NPA under the 90-day norm must have their Days Past Due and account status updated in the next CIC reporting cycle.
NBS-1 and NBS-2 returns must reflect the correct NPA position under the 90-day norm. Submissions that use the old threshold will be inconsistent with the regulatory position and flagged during data scrutiny.
Credit risk dashboards, portfolio quality reports, and ALCO presentations must be updated to reflect NPA computed on the 90-day basis. Boards that are still seeing 120-day NPA numbers are not getting accurate regulatory position reporting.
What the Board Must Approve — Urgently
RBI's SBR framework is explicit that credit policy is a Board-approved document. The 90-day NPA norm must be embedded in that policy. Beyond the policy update, the Board must also approve revised provisioning matrices, updated credit risk appetite statements, and a reconciliation of the opening NPA position under the new norm.
Any NBFC-BL that goes into an RBI inspection without these Board approvals documented is exposed — not just for the NPA classification itself, but for the broader governance finding that the Board was not informed and did not act on a known regulatory deadline.
Has your Board approved the updated NPA policy?
A 30-minute call will identify your specific gaps — credit policy, provisioning, CIC reporting, and DNBS returns — and give you a prioritised remediation plan.
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