20 Prudential Norms
(1) Every Nidhi shall adhere to the prudentialnorms for revenue recognition and classification of assets in respect ofmortgage loans or jewel loans as contained hereunder.
(2) Income including interest or any other charges on non-performingassets shall be recognised only when it is actually realised and any suchincome recognised before the asset became non-performing and whichremains unrealised in a year shall be reversed in the profit and loss accountof the immediately succeeding year.
(3) (a) In respect of mortgage loans, the classification of assets and theprovisioning required shall be as under:
Nature of Asset | Provision Required |
Standard Asset | No provision |
Sub-Standard Asset | 10% of the aggregate outstanding amount |
Doubtful Asset | 25% of the aggregate outstanding amount |
Loss Asset | 100% of the aggregate outstanding amount |
Provided that a Nidhi may make provision for exceeding the percentagespecific herein.
(b) The estimated realisable value of the collateral security to which a Nidhihas valid recourse may be reduced from the aggregate outstanding amount,if the proceedings for the sale of the mortgaged property have been initiatedin a court of law within the previous two years of the interest, income orinstalment remaining unrealised.
(4) In case of companies which were incorporated on or before 26-07-2001, such companies shall make provisions in respect of loans disbursedand outstanding as on 31-03-2002 for income reversal and non-performingassets as per table given below:
For the year ended | Extent of provision |
31-03- 2015 | Un-provided balance on equal basis over the three years as specified in the preceding column. |
31-03- 2016 | |
31-03- 2017 |
(5) (a) The Notes on the financial statements of a year shalldisclose-
(i) the total amount of provisions, if any, to be made on account ofincome reversal and non-performing assets remaining unrealised;
(ii) the cumulative amount provided till the previous year;
(iii) the amount provided in the current year; and
(iv) the balance amount to be provided.
(b) Such disclosure shall continue to be made until the entireamount to be provided has been provided for.
(6) In respect of loans against gold 1[,silver] or jewellery-
(a) the aggregate amount of loan outstanding against the security ofgold 1[,silver] or jewellery shall either be recovered or renewed within threemonths from the due date of repayment;
(b) if the loan is not recovered or renewed and the security is not soldwithin the aforesaid period of three months, the company shall makeprovision in the current year’s financial statements to the extent ofunrealised amount or the aggregate outstanding amount of loanincluding interest as applicable;
(c) no income shall be recognised on such loans outstanding after theexpiry of the three months period specified in (a) above or sale of gold 1[,silver]or jewellery, whichever is earlier; and
(d) the loan to value ratio shall not exceed 80 percent.
Explanation.- For the purposes of this rule, the term ‘loan to value ratio’means the ratio between the amount of loan given and the value of gold1[,silver] or jewellery against which such loan is given.
Amendment:
1. Inserted by Nidhi (Amendment) Rules, 2022 dated 19th April, 2022