From Stress to Success
We at FinLender, exclusively provide funding for SMA Accounts (Special Mention Accounts are those assets/accounts that shows symptoms of bad asset quality in the first 90 days itself), Distress Account, NPA Accounts and Finance for OTS.
What is a Distressed Asset Funding?
Special Mention Accounts (SMA) are accounts that exhibit early signs of deteriorating asset quality within the first 90 days or before being classified as an NPA (Non-Performing Asset). The RBI introduced the classification of Special Mention Accounts (SMA) in 2014 to proactively identify accounts that have the potential to become NPAs or Stressed Assets. This classification aims to identify and address the issue at an early stage for better problem management. There are four categories of Special Mention Accounts: SMA-NF, SMA 0, SMA 1, and SMA 2.
Special Mention Accounts are typically classified based on the duration of overdue payments. For example, an account with an overdue period of 31 to 60 days is categorized as SMA-1. In contrast, an account with an overdue period of 61 to 90 days falls under SMA-2.
However, some Special Mention assets are identified based on other factors that indicate account distress or irregularities (SMA-NF). These non-financial indications reflect the stress levels of the asset.
Reasons For SMA Account
- Late submission of stock statements, control statements, or financial statements
- Repeated instances of cheques issued by borrowers being returned
- Bills or cheques that were discounted are being returned
- Non-payment of bills discounted or under the collection
- Weak financial performance is indicated by declining sales and profits, cash losses, net losses, and erosion of net worth
How Special Mentioned Accounts are different from NPA Accounts?
Non-Performing Asset (NPA) is that loan asset/account in which the principal or interest payment or both have remained overdue for a continuous period of more than 90 days, whereas Special Mention Accounts are those assets/accounts that shows symptoms of bad asset quality in the first 90 days itself or before it being identified as NPA. The classification of Special Mention Accounts (SMA) was introduced by the RBI in 2014, to identify those accounts that have the potential to become an NPA/Stressed Asset.
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SMA categories |
Basis for classification |
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SMA-NF |
Non-financial (NF) signals of stress |
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SMA-0 |
Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress. Delay of 90 day 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. |
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SMA-1 |
Principal or interest payment overdue between 31-60 days |
|
SMA-2 |
Principal or interest payment overdue between 61-90 days |
We specialize in special situations investing, offering expert guidance and tailored solutions to meet your unique investment needs. Our team of seasoned professionals understands the intricacies of special situation funding, unlocking hidden opportunities in the market. Whether it’s investing in special situations or managing Special Mention Accounts (SMA), we are here to assist you every step of the way.
We at FinLender help you in Stressed Account Financing from our in-house investors (who are registered under RBI) who are interested in taking over all the Fund or non-fund-based limits from the company so that you can revive your CIBIL Score and company before turning NPA.
To learn more about special situations investment, stressed account finance, stressed capital, NPA finance, or OTS finance, we encourage you to consult with our advisor. They will provide you with comprehensive information and guidance on these investment opportunities.
