1. Doubtful & Loss Assets other than Decreed Accounts
For ascertaining the Total Recoverable Dues, Bank shall continue to adopt the system of Module Interest Approach, i.e. calculation of interest on simple basis instead of compounding basis from the date of NPA on principal amount on reducing balances and the rate of interest shall be realistic i.e. at present PLR or rate of interest presently charged on the loan account, whichever is lower.
2. Decreed Accounts
Total liability of the borrower shall be calculated, as per terms of the decree, i.e. rate of interest awarded in the decree with cumulative effect or simple shall be as per Decree.
3. Sub-Standard Assets
In respect of sub-standard assets, the amount of Recoverable Dues shall be calculated applying contracted rate of interest or presently charged rate of interest on the loan account, whichever is lower, on simple basis from the date of NPA. The amount of unrealized interest reversed at the time of declaring the account NPA for the first time shall be added.
The salient features of the approved amendments are as under:-
Ø Net present value of realizable value of primary / collateral securities shall be calculated as per detailed formula given under.
Ø The calculation of settlement amount shall be based on net present value of realizable value of securities in case of doubtful and loss NPA accounts,
Ø In case of all those borrowal accounts, wherein award staff has guaranteed / availed the loan and has retired or is not alive, the settlement proposal shall be considered / allowed by the Chairman & Managing Director.
Ø In case of all those borrowal accounts, wherein Officer has guaranteed / availed the loan and has retired or is not alive, the settlement proposal shall be considered / allowed by the Management Committee of the Board.
Ø Secondman of ZO/RO does not have power to settlement the account under the policy