Definition
Special Mention Account (SMA)
A Special Mention Account is a loan showing early signs of stress, classified by the RBI into SMA-0, SMA-1 and SMA-2 based on how many days payment is overdue, before it becomes an NPA.
The SMA framework is the RBI's early-warning system. SMA-0 flags 1-30 days overdue, SMA-1 flags 31-60 days and SMA-2 flags 61-90 days. If an SMA-2 loan stays overdue beyond 90 days, it slips into the NPA category.
Lenders report SMA data to the RBI's Central Repository of Information on Large Credits (CRILC) for exposures above a threshold, helping the regulator spot building stress in large borrowers. Rising SMA-2 balances are an early signal of future slippages.
Related terms
- Gross NPA Ratio (GNPA)The Gross NPA ratio is the share of a bank's total advances that have turned into non-performing assets, before deducting provisions held against them.
- Non-Performing Asset (NPA)A Non-Performing Asset is a loan or advance on which the borrower has not paid interest or principal for 90 days or more, as defined by RBI norms.
- Slippage RatioThe slippage ratio measures fresh non-performing assets added during a period as a percentage of standard advances at the start of that period.
- Restructured AssetsRestructured assets are loans whose terms, such as tenure, interest rate or repayment schedule, have been modified because the borrower is in financial difficulty.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.