Overdue and Out of Order
Overdue:
An account is said to be overdue, if the amount due to bank is not paid by borrower
within due date as specified by bank.
For E.g.: Borrower has
taken CC Facility amounting to INR 10 lacs from XYZ Bank, on which interest of
12% p.a. is charged which is to be paid on 7th of next month. i.e. Interest
of INR (10,00,000*12%)/12 = 10000 per
month charged for the month January’22 is required to be paid on or before
February 7, 2022 (due date decided by
bank). And if it is not paid till February 7, 2022 then account will be
treated as an overdue account.
Out of Order: An account is said to be Out of order in two scenarios
- If outstanding (o/s) balance remains continuously in excess of sanctioned limits/Drawing power: For e.g. If a borrower has sanctioned limit of INR 10 lacs, but his o/s balance is 10.35 lacs because interest is not paid on time, then this account will be treated as “Out of Order”.
- If o/s balance is within sanctioned limit but no credits has been done in the account or credits are not sufficient to cover the interest for a period of continuously 90 days then account will be treated as “Out of Order” . For e.g. Borrower has sanctioned limit of INR 10 lacs, O/s INR 8.5 Lacs and interest charged in the account is INR 8000/- for the month Feb’22 then in both the below scenarios account will be treated as “Out of Order”.
a) If
nil credits has been done in the account continuously for 90 days.
b) If
credits has been done, but say for only INR 9500/- which is less than INR
10000/- i.e. amount due.
An account which is
overdue has the probability of becoming an Out of Order account. But Out of
Order account may not be necessarily an overdue account.
Definition of Overdue
and Out of Order can be referred from RBI Link
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