What do SMA-0, SMA-1 and SMA-2 mean?
Special mention accounts — the stages before NPA.
Buckets that flag stress before an account becomes non-performing, based on how long a payment has been overdue. They are not internal warnings a lender may define for itself — they are a reported position, derived from the same day-end DPD that drives classification.
How is SMA-0, SMA-1, SMA-2 calculated?
SMA-0 from one day past due, SMA-1 beyond thirty, SMA-2 beyond sixty, with ninety being the boundary into non-performing. Because the first boundary is day one rather than day thirty-one, an account is in a reportable bucket from the morning after it misses.
SMA-0, SMA-1, SMA-2: a worked example
An instalment due on 5 April is unpaid. The account is SMA-0 on 6 April, SMA-1 on 6 May, SMA-2 on 5 June, and non-performing on 5 July if nothing is paid. The transition dates carry more information than the balances do, which is why they are what gets watched.
Why does SMA-0, SMA-1, SMA-2 matter?
Because deterioration is visible a quarter before it becomes a provision. A book where accounts routinely reach SMA-2 and then recover is telling a different story from one where they arrive there and stay.
What the regulations say about SMA-0, SMA-1, SMA-2
The SMA framework and its reporting cadence sit alongside the IRAC norms; the November 2021 clarification fixed the day-one boundary explicitly.
What a lending system has to do about SMA-0, SMA-1, SMA-2
SMA buckets are derived from the same day-end DPD the classification uses, so a watch list and an NPA report cannot disagree about an account. The SMA Watch List is a live report.
Related terms
- DPD (days past due) — How many days an instalment has been overdue.
- Overdue — An amount the lender demanded and the borrower did not pay.
- NPA (non-performing asset) — An account where payment is overdue beyond the prescribed period.
- IRAC norms — Income recognition, asset classification and provisioning.
From the people who wrote this
Run your lending on Lenviq
The section above describes what a lending system has to do about this term. Lenviq does it — on every account, computed at day-end, with the direction it comes from recorded against it.
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