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 has the potential to become an NPA/Stressed Asset. Logic of such a classification is because some accounts may turn NPA soon. Here, an early identification will help to tackle the problem better. There are four types of Special Mention Accounts – SMA-NF, SMA 0, SMA1 and SMA 2.
The Special Mention Accounts are usually categorized in terms of duration. For example, in the case of SMA -1, the overdue period is between 31 to 60 days. On the other hand, an overdue between 61 to 90 days will make an asset SMA -2.
But some ‘Special Mention’ assets are identified on the basis of other factors that reflect sickness/irregularities in the account (SMA -NF).
In the case of SMA -NF, non-financial indications about stress of an asset is considered.
