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Module: General Practice

Q23: Under the Special Mention Account (SMA) framework for early identification of stress, an account is classified as "SMA-1" when the principal or interest payment is overdue for which of the following periods?

A
1 to 30 days
B
31 to 60 days
C
61 to 90 days
D
91 days and above
✅ Correct Answer: B
🎯 Quick Answer:
SMA-1 classification applies when the overdue period is between 31 and 60 days.
Concept Definition: The Special Mention Account (SMA) framework is a preventive tool to identify incipient stress in loan accounts before they turn into NPAs (which happens at >90 days). Banks must report SMA status to the Central Repository of Information on Large Credits (CRILC). Structural Breakdown: The 3 categories are: 1. SMA-0: Principal or interest overdue between 1 and 30 days.
2. SMA-1: Principal or interest overdue between 31 and 60 days.
3. SMA-2: Principal or interest overdue between 61 and 90 days.
Causal Reasoning: This granular classification forces banks to initiate corrective action plans early.
If an account crosses 60 days (SMA-2), it triggers immediate resolution processes under the Prudential Framework for Resolution of Stressed Assets.
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