SMA (Special Mention Accounts) in CIBIL Report 

SMA in CIBIL is one aspect that most people are unaware of. SMA classification is crucial to lenders as it aids in placing necessary measures to retrieve loans from unreliable borrowers.

So, in this article, we’ll explore more about SMA and how it helps lenders. 

What is SMA Full Form In Banking or CIBIL?

SMA full form in CIBIL is Special Mention Accounts. 

Special Mention Accounts(SMA) refer to the accounts that show signs of turning into a non-performing asset in the first 90 days or even before being identified as an NPA. 

RBI introduced the SMA classification in 2014 to help identify those accounts that pose a threat of becoming NPA soon.

There are four types of SMAs.

  • SMA - 0

  • SMA - 1

  • SMA - 2

  • SMA - NF

Let us now look at each SMA and what they mean in detail.


SMA - 0

Principal or interest payment not overdue for more than 30 days but the account showing signs of incipient stress

SMA - 1

Principal or interest payment overdue between 31-60 days

SMA - 2

Principal or interest payment overdue between 61-90 days

SMA - NF

Non-financial stress indications of an asset

What is NPA?

Loans or advances made by banks or other financial institutions are classified as non-performing assets (NPAs) if the borrower has missed at least 90 days of principal and interest payments and the loan is no longer earning money for the lender.

What is The Difference Between SMA and NPA?

When borrowers are unable to pay the interest, their assets for the bank are deemed "non-performing" because they are not producing any income for the bank. Since these assets are no longer producing income, the RBI has classified them as NPAs.

Whereas, SMAs are accounts that have the potential to turn in NPAs soon. By early classification, lenders can take appropriate measures to tackle the problem. 

SMA in CIBIL means Special Mention Account. SMA classification is applicable to every type of loan extended by the lender except agricultural loans based on crop seasons.

Conclusion

Non-performing Assets cause banks to lose money and RBI has introduced SMAs to aid lenders in identifying risk-posing accounts. These accounts are SMA in CIBIL. Lenders can easily segregate the SMAs based on the time period it has been inactive and take appropriate action.  

FAQs

If the principal or interest payment is overdue for up to 30 days, the account comes under SMA - 0.

After 90 days of payment overdue, SMA turns into NPA.

Yes. An account is classified as SMA if the payment is overdue for a certain period of time. A small delay in repayments can reduce your credit score. So, SMA classification will negatively impact your CIBIL score. 

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