Loan for Stress Accounts (SMA)

Finance For SMA1 & SMA2​

  • Loan for SMA 1 Account

 

  • Loan for SMA 2 Account

 

  • Loan for Stress Account

What is Special Mention Accounts (SMA)?

Special Mention Account (SMA) refers to an account that exhibits signs of potential credit weakness or is at risk of becoming a non-performing asset (NPA). These accounts are categorized based on the level of risk and indicate varying degrees of credit stress.

Special Mention Accounts are typically classified into three categories: SMA-0, SMA-1, and SMA-2. SMA-0 represents the lowest level of risk, SMA-1 indicates a moderate level of risk, and SMA-2 represents the highest level of risk.

SMA Sub Category

Classification basis

SMA – NF

Non-financial (NF) signals of stress

SMA-0

Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress, Delay of 90 days or more in (a) submission of stock statement / other stipulated operating control statements or (b) credit monitoring or financial statements or (c) non-renewal of facilities based on audited financials.

SMA- 1

Principal or interest payment overdue between 31-60days.

SMA – 2

Principal or interest payment overdue between 61-90 days.

 

Fund Source India exclusively provide finance/loan for  Special Mention Accounts (SMA) whether you are classified as SMA1, SM2 or even classified as Non Performing Accounts (NPA) .

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What is Stress Account Finance?

Stress Account Finance is a loan given by a financial institution registered under RBI(Reserve Bank of India) to a borrower who is under financial stress to pay off his statutory liabilities, overdue in loan repayments & to provide working capital for business.

Stress Account Finance Features

• Funding Available from Rs.2 crore up to any amount
• Funding available in all Major Cities
• Previous or New CIBIL Issues
• Helps to rebuild credit score
• Easy onset of process through softcopies

FAQ's

Q1: What is a Special Mention Account (SMA)?

A1: Special Mention Account (SMA) refers to an account that exhibits signs of potential credit weakness or is at risk of becoming a non-performing asset (NPA). These accounts are categorized based on the level of risk and indicate varying degrees of credit stress.

Q2: How are Special Mention Accounts classified?

A2: Special Mention Accounts are typically classified into three categories: SMA-0, SMA-1, and SMA-2. SMA-0 represents the lowest level of risk, SMA-1 indicates a moderate level of risk, and SMA-2 represents the highest level of risk.

Q3: What are the characteristics of SMA-0, SMA-1, and SMA-2 accounts?

A3: SMA-0 accounts have a high probability of timely repayment but may exhibit early warning signals or irregularities that require monitoring. SMA-1 accounts pose a moderate level of risk, indicating signs of stress or delay in payment. SMA-2 accounts represent the highest level of risk, indicating a significant deterioration in credit quality and requiring immediate attention.

Q4: How do Special Mention Accounts impact financial institutions?

A4: Special Mention Accounts serve as an early warning system for financial institutions, allowing them to identify potential credit weaknesses and take proactive measures to mitigate risks. Proper monitoring and management of these accounts help banks maintain a healthy credit portfolio, comply with regulatory requirements, and minimize potential losses.

Q5: What actions are taken when an account becomes a Special Mention Account?

A5: When an account becomes a Special Mention Account, financial institutions typically analyze the reasons for the account's classification, assess the creditworthiness of the borrower, and take appropriate actions to mitigate the risk. These actions may include loan restructuring, rescheduling, increased monitoring, or initiating recovery measures.

Q6: How do Special Mention Accounts impact lending practices?

A6: Special Mention Accounts influence lending practices by prompting lenders to conduct thorough due diligence and evaluate the creditworthiness of borrowers more carefully. Lenders aim to minimize the chances of accounts slipping into the special mention category by implementing prudent lending practices, which ultimately reduces the credit risk exposure of financial institutions.

Q7: What is the role of regulatory authorities in relation to Special Mention Accounts?

A7: Regulatory authorities, such as central banks or supervisory bodies, often require financial institutions to report special mention accounts as part of their regulatory compliance obligations. This reporting helps regulators monitor the health of the banking sector, assess credit quality, and identify potential systemic risks.

Q8: Can Special Mention Accounts be resolved and returned to a regular category?

A8: Yes, with proactive measures and appropriate actions, Special Mention Accounts can be resolved. These measures may include loan restructuring, rescheduling, improved repayment plans, or implementing recovery strategies. Successfully resolving the issues can result in the account being returned to a regular performing status.

Q9: How do Special Mention Accounts impact borrowers?

A9: Special Mention Accounts may indicate financial stress or potential credit weakness on the part of borrowers. It is essential for borrowers to be proactive in addressing these issues, working closely with the financial institution to explore potential solutions and avoid further deterioration of their credit profile.

Q10: How can borrowers prevent their accounts from becoming Special Mention Accounts?

A10: Borrowers can maintain a good credit profile and reduce the risk of their accounts becoming Special Mention Accounts by ensuring timely repayment of loans, adhering to the terms and conditions of the loan agreement, maintaining a healthy financial position, and promptly communicating with the lender in case of financial difficulties.
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