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Banks were
allowed to spread over the shortfall in the value of sale over net book value
(NBV), over a period of two years for NPAs sold up to 31/03/16.
It has now been
decided to extend it for sale of NPAs up to 31/03/17. However, from 1/04/16 to 31/03/17,
banks will be allowed to amortise the shortfall over a period of only four
quarters from the quarter in which the sale took place.
Where a bank
chooses to make the necessary provisions over more than one quarter and this
results in the full provisioning remaining to be made, banks should debit
'other reserves' by the amount remaining un-provided.
However, banks should proportionately reverse the debits to ‘other reserves’
and complete the provisioning by debiting profit and loss account, in the
subsequent quarters of the next financial year.
Banks shall make suitable disclosures of such
provisioning in Notes to Accounts as at the end of the year.
Based on RBI circular dated 13/06/2016. For any further
clarification please refer www.rbi.org.in ……….Poppy
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