Axis Bank will now classify home loans of credit card defaulters as non-performing loans. This is being done as a part of its prudent provisioning practice to tackle troubled loans, the bank said. , as per a report by The Times of India.
The move comes even as a Supreme Court order has stayed classification of defaults during the pandemic, the report added.
NPLs from banks’ perspective means a hit on earnings as it will have to provision for the loan while interest payment received on the loan will no longer be income.
For borrowers, the bank can now initiate recovery proceedings at any time to recall even the lump sum amount. Loans are usually classified as NPAs after erring on payment by 90 days.