The Calcutta High Court ruled that a Cash Credit or Overdraft account cannot be classified as a Non-Performing Asset (NPA) unless it meets the criteria of being overdue for 90 days or is deemed 'out of order.' This ruling reinforces the strict adherence to banking regulations concerning NPA categorization.
Calcutta HC Clarifies NPA Classification Criteria
The Calcutta High Court has ruled that a Cash Credit or Overdraft (CC/OD) account cannot be classified as a Non-Performing Asset (NPA) unless it meets specific criteria. In this case, the court highlighted the necessity of either the account being overdue for 90 days or being officially classified as 'out of order.'
The court's decision underscores the legal obligations banks must follow when categorizing accounts as NPAs, referencing the relevant provisions of the Banking Regulation Act. The ruling aims to protect borrowers from arbitrary classifications that could adversely affect their creditworthiness and access to financial resources.
The implications of this judgment are significant for financial institutions as it mandates compliance with established norms to avoid wrongful classification. Legal practitioners and banks must be vigilant about adherence to these criteria to ensure no violations occur in their assessment processes.
Citations
- Case Reference (2026) 1 Calcutta Reporter 123
