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Mint
3 days ago
- Business
- Mint
What happens if you default on your personal loan and it becomes an NPA?
Timely EMI payments for a personal loan or any other loan have the highest weightage in calculating the credit score. Hence, the borrower must pay the EMI before or by the due date. However, in some cases, despite their best efforts, a borrower may be unable to pay the EMI on time. Some reasons for these include job loss, delay in salary, a salary cut, using the money for a medical or any other emergency, etc. In such a case, the bank has to categorise the loan as an NPA if the EMI remains unpaid for a specified period. In this article, we will understand what an NPA is, the process of categorising a loan as an NPA, and what happens when a loan is categorised as an NPA. As per RBI guidelines, if a borrower doesn't pay the personal loan interest or principal for 90 days or more, it is categorised as a non-performing asset (NPA). The personal loan is termed non-performing as it is not earning interest for the bank or the NBFC that has given it. Before getting categorised as an NPA, the loan goes through the Special Mention Account (SMA) categorisation. When a loan starts showing early signs of stress, it is categorised as SMA as follows. SMA-0: When a personal loan principal or interest or both, have remained overdue for less than 30 days, it is included under the SMA-0 category. When a personal loan principal or interest or both, have remained overdue for less than 30 days, it is included under the SMA-0 category. SMA-1: When a personal loan principal or interest or both, have remained overdue for more than 30 days but less than 60 days, it is included under the SMA-1 category. When a personal loan principal or interest or both, have remained overdue for more than 30 days but less than 60 days, it is included under the SMA-1 category. SMA-2: When a personal loan principal or interest, or both, have remained overdue for more than 60 days but less than 90 days, it is included under the SMA-2 category. Let us understand with the help of an example. A borrower has taken a Rs. 50,000 personal loan with a one-year tenure. The EMI date is the 1st of the month. The borrower has paid 3 EMIs on time. The 4th EMI is due on 1st June, which the borrower misses. So, the personal loan account will be categorised as SMA-0. If the loan EMI remains unpaid till 1st July, it will be categorised as SMA-1. If the loan EMI remains unpaid till 31st July, it will be categorised as SMA-2. Further, if the EMI remains unpaid till 30th August, the personal loan will be categorised as an NPA. The number of days for which an EMI has remained unpaid is tracked through the Days Past Due (DPD). In the credit report, if the DPD is 0, it means the loan EMIs have been paid on time. Any number higher than 0 means the loan EMI repayment has been delayed. For example, if the EMI has remained unpaid for 30 days, it will be mentioned as 30 DPD. Whenever there is any delay in the personal loan EMI repayment, the bank or NBFC reports it to the Credit Information Companies (CICs) like CRIF High Mark. The timely repayment of loan EMIs has the highest weightage in calculating an individual's credit score. So, when there is an EMI repayment delay, there is a big drop in the borrower's credit score. Along with the EMI delay repayment, the borrower's credit report will reflect the Days Past Due (DPD), and the SMA categorisation (SMA-0, SMA-1, or SMA-2). Once a personal loan has been categorised as an NPA, it can be further sub-categorised as follows. Substandard (SUB): If a personal loan has remained NPA for a period of less than or equal to 12 months, it will be categorised as sub-standard. Doubtful (DBT): If a personal loan account has remained an NPA for more than 12 months, it will be categorised as doubtful. Usually, the longer the duration for which the personal loan remains unpaid, the lower the probability of recovery. Loss (LSS): If the bank or NBFC feels the personal loan outstanding amount will remain uncollectible, it will be categorised as a loss. By this stage, the bank may have exhausted all the ways of recovering the loan money. If a borrower delays a personal loan EMI repayment, the bank will start the recovery process. Recovery notice to borrower: The bank will send a legal notice to the borrower with the details of the outstanding loan amount and its repayment. The notice will mention the date by which the borrower must pay the outstanding loan amount. If the borrower has a genuine problem due to which they are facing financial constraints, they may approach the bank. The borrower may discuss the issue with the bank and request a loan restructuring. Filing a lawsuit: If the borrower doesn't clear the outstanding loan amount by the date specified in the legal notice, the bank will file a Court case. During the Court proceedings, if the borrower doesn't respond favourably, the Judge can pass an order to attach the borrower's assets for loan recovery. The attachment order can include the borrower's bank savings accounts, fixed deposits, etc. In the earlier section, we have seen how loan EMI repayment delays are reported to the credit bureaus. The credit score takes a hit, and the NPA status is reflected in the credit report. Once a loan account is categorised as an NPA, it will remain till the borrower clears the entire personal loan arrears, including principal and interest. If and when the borrower clears the entire personal loan arrears, the NPA account is upgraded to a standard account. We have discussed how delaying personal loan EMI repayment damages the credit score and leads to bank legal action for recovery. Any reports of delays/defaults in the credit report make it difficult for the borrower to get new loans or credit cards soon. Also, bank legal action can lead to the attachment of assets through a Court order. Hence, the borrower must pay all personal loan EMIs before or on time to ensure much-needed peace of mind. Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn. For all personal finance updates, visit here. Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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Business Standard
18-07-2025
- Business
- Business Standard
One-time jump in slippages hurts Axis Bank Q1 results; should you sell?
Axis Bank share price: Frequent negative surprises on the earnings front, also seen during the June quarter of the current financial year, has forced analysts to cut Axis Bank's earnings forecast for the coming years. In some cases, analysts have even downgraded the stock to factor-in the weakness in earnings. Those at Nuvama Institutional Equities, for instance, have downgraded Axis Bank stock to 'Hold' on repeated volatility in asset quality and earnings growth. "We cut earnings by 5.4 per cent for FY26 and 6.3 per cent for FY27on an already below consensus base. We also trim our share price target to ₹1,180, from ₹1,400, valuing the stock at 1.7x book value, based on FY26 earnings estimates. Since Axis Bank has more catch up to do on rate cuts compared to peers, we expect the stock's discount to peers to widen given repeated volatility," the brokerage said in its report. On the bourses, Axis Bank share price crashed 7.4 per cent intraday to hit a low of ₹1,073.95 per share on the BSE. By comparison, the BSE Sensex index was down 164 points (0.2 per cent) at 9:33 AM. Axis Bank Q1 slippages On July 17, Axis Bank said its Q1FY26 net profit slipped 4 per cent year-on-year (Y-o-Y) to ₹5,806 crore, weighed by a "technical" slippages and one-time bump in provisions. "Prudent application of technical parameters for recognising slippages, and consequent upgrades impacted asset quality, including provisions, in Q1FY26. Technical impact is largely restricted to cash credit and overdraft products, and one-time settled (OTS) accounts," Axis Bank said. The "technical slippage" affected the bank's net profit by ₹614 crore, return on assets (RoA) by 15 basis points (bps), and return on equity (RoE) by 1.4 per cent, it added. The bank's total slippages stood at ₹8,200 crore at the end of Q1, including slippages worth ₹2,709 crore due to the "technical impact". Total slippages were, thus, 71 per cent higher on a Y-o-Y and quarter-on-quarter (Q-o-Q) basis. Further, while the bank's loan loss provisions shot up to ₹3,900 crore, up 2.85 times Q-o-Q and 1.52 times Y-o-Y, its total provisions and contingencies were ₹3,948 crore in Q1FY26. By comparison, the same was ₹1,359 crore in Q4FY25 and ₹2,039 crore in Q1FY25. Of the total provisions, ₹821 crore was attributable to the "technical impact". This also led to the gross non-performing asset (GNPA) ratio and net NPA ratio worsening by 29bp and 12bp Q-o-Q, respectively, to 1.57 per cent and 0.45 per cent. "Though the management had earlier given guidance for this policy change to ensure industry-best prudency, the extent of NPA formation is higher than expected. The management indicated that Q1FY26 bore the impact of the stock plus flow, and so slippages during 9MFY26 should be relatively moderate (albeit elevated), as also the credit cost," noted analysts at Emkay Global Financial Services. The management's decision to move from Days Past Due (DPD)-based NPA recognition to qualitative judgement-based recognition, and to not upgrade an account till the last installment is received in full in case of OTS, analysts at Emkay added, would, therefore, lead to elevated NPA flow in the near term, albeit largely even-out in the long term. Slow growth hurts Axis Bank margins Apart from asset quality issue, Axis Bank's Q1 earnings also bore the impact of slow loan growth and rate cut cycle. The bank's total deposits slipped 1 per cent Q-o-Q, but rose 9.3 per cent Y-o-Y, to ₹11.61 trillion. Its total loans, meanwhile, grew 1.8 per cent Q-o-Q and 8 per cent Y-o-Y to ₹10.59 trillion, driven by corporate segment. This led to an increase in loan-to-deposit ratio (LDR) to 91.2 per cent. Net interest income (NII) was broadly flat Y-o-Y, but down 2 per cent Q-o-Q, at ₹13,560 crore with net interest margin (NIM) contracting 17bps Q-o-Q to 3.80 per cent. Notably, Axis' NIM contraction came even when the bank has been the slowest among peers in cutting rates. The bank, they said, follows the T+90 repricing method, which is slower than peers. "We cut FY26, FY27, and FY28 earnings estimates by 7 per cent, 3 per cent, and 1 per cent, respectively. We expect the RoA to dip to 1.6 per cent in FY26E and gradually recover to 1.7 per cent," said Emkay Global. It has maintained its 'Buy' rating on the stock with an unchanged share price target of ₹1,400 as the stock trades cheap at 1.4x FY27E adjusted book value. Motilal Oswal Financial Services, meanwhile, has maintained its 'Neutral' rating on the stock with a target of ₹1,250 as it sees higher slippages and credit costs in the near-term. "The residual loan re-pricing will also continue to put pressure on margins, though the bank has maintained its through-cycle margin guidance of ~3.8 per cent. We cut our earnings estimates for FY26 and FY27 by 8.6 per cent and 5.7 per cent, respectively," it said.
The Age
04-07-2025
- Entertainment
- The Age
Usher cancels Australian tour just weeks after tickets go on sale
R&B icon Usher has cancelled all of his Australian tour dates just months after announcing what was going to be his first tour down under in over a decade. A statement was posted on the Ticketek website on Friday, stating that the promoter of Usher's Australian tour 'regrets to advise that the scheduled shows to take place in November/December will no longer be proceeding'. A Live Nation spokesperson confirmed none of the shows would be going ahead. No specific reason for the cancellation was cited. In March, the My Boo singer shared news of the Australian leg of his Past, Present, Future tour on Instagram, telling fans he would be 'bringing the A to the AUS' later this year. He was scheduled to perform six shows at Melbourne's Rod Laver Arena between November 19 to 26, and another six shows at Sydney's Qudos Arena between December 1 and 11. Tickets went on sale in May, less than two months ago. Loading According to the Ticketek website, those who bought tickets will automatically receive full refunds, and no action is required from them. Notably, Ticketek is only responsible for the sale of tickets. 'Customers should allow approximately 30 business days for the refund to appear in their account,' it read. 'Customers who purchased tickets at a Ticketek agency or using Ticketek gift vouchers have been contacted to the email address of their Ticketek account to request additional information so we can process your refund.' Those who bought their tickets via Ticketek also received this information in an email sent on Friday afternoon. It has been nearly 14 years since Usher's previous tour in Australia – the OMG tour in 2011. Demand appeared to be strong for his upcoming tour, which has already taken place in the US and Europe, as the promoter added four additional shows to the schedule after the presale in May.
Sydney Morning Herald
04-07-2025
- Entertainment
- Sydney Morning Herald
Usher cancels Australian tour just weeks after tickets go on sale
R&B icon Usher has cancelled all of his Australian tour dates just months after announcing what was going to be his first tour down under in over a decade. A statement was posted on the Ticketek website on Friday, stating that the promoter of Usher's Australian tour 'regrets to advise that the scheduled shows to take place in November/December will no longer be proceeding'. A Live Nation spokesperson confirmed none of the shows would be going ahead. No specific reason for the cancellation was cited. In March, the My Boo singer shared news of the Australian leg of his Past, Present, Future tour on Instagram, telling fans he would be 'bringing the A to the AUS' later this year. He was scheduled to perform six shows at Melbourne's Rod Laver Arena between November 19 to 26, and another six shows at Sydney's Qudos Arena between December 1 and 11. Tickets went on sale in May, less than two months ago. Loading According to the Ticketek website, those who bought tickets will automatically receive full refunds, and no action is required from them. Notably, Ticketek is only responsible for the sale of tickets. 'Customers should allow approximately 30 business days for the refund to appear in their account,' it read. 'Customers who purchased tickets at a Ticketek agency or using Ticketek gift vouchers have been contacted to the email address of their Ticketek account to request additional information so we can process your refund.' Those who bought their tickets via Ticketek also received this information in an email sent on Friday afternoon. It has been nearly 14 years since Usher's previous tour in Australia – the OMG tour in 2011. Demand appeared to be strong for his upcoming tour, which has already taken place in the US and Europe, as the promoter added four additional shows to the schedule after the presale in May.
New Indian Express
22-06-2025
- General
- New Indian Express
The four pillars of Delhi's heritage
When Arnav Vij, Aryan Bardeja, Vihaan Tampi and Karissa Gupta discovered that their school stood right next to a historic gurudwara—home to a large rock where Bhagat Singh once tested bombs ahead of the famous Central Legislative Assembly bombing in 1929—they were stunned. The realisation that they passed daily by a site of such historical importance moved the young history enthusiasts to do something about it. 'It made us realise that in a culturally rich city like Delhi, there are countless lesser-known or hidden places with deep historical and cultural significance,' says Vihaan. Thus was born WaPas or Walking Past—an app that guides users through historical monuments across Delhi-NCR. Developed by the four Class XII students of Noida's Shiv Nadar School, WaPas uses GPS and geotagging to help users rediscover the history they walk past every day, one notification at a time. 'It's a navigation app that tells users about nearby monuments, historical places, and landmarks—especially the lesser-known ones,' says Aryan. The app currently features over 500 monuments and heritage sites. 'We wanted to cover both the famous and the forgotten,' says Arnav, adding, 'For instance, near Feroz Shah Kotla, there are old watchtowers that are largely neglected. We've also mapped small mosques, several gurudwaras, besides well-known sites like the Red Fort and Humayun's Tomb.' WaPas acts as a pocket-sized heritage guide. 'Our goal is to raise awareness about the heritage in our own neighbourhoods,' says Vihaan, who led the app's development, adding, 'We hope the app becomes a catalyst for people to visit and appreciate these lesser-known sites.'
