Paying back a personal loan on time is important to keep your finances on track. Lenders watch how loans are repaid to see if any account needs closer attention when a payment is late.
Two key categories in this process are SMA (Special Mention Account) and NPA (Non-Performing Asset). Understanding these terms allows borrowers to track the status of their loans, assess potential risks, and take timely action to address any delays before they escalate.
What does SMA (Special Mention Account) mean?
When an EMI is not paid on time, the loan account is classified under the SMA category. This categorisation indicates that the repayment is overdue and helps lenders monitor the account based on the delay duration.
The SMA classification is divided into three stages based on how long the payment remains overdue. If the borrower does not pay the principal or interest for up to 30 days , the loan account is marked as SMA-0. If the delay continues and the overdue period is between 31 and 60 days , the account moves toSMA-1. When the payment remains unpaid for 61 to 90 days , the account is classified as SMA-2 , which signals a higher repayment risk to the lender.
What happens if nothing is paid for a longer period?
If the repayment remains overdue, usually for over 90 days, the loan moves into the NPA (Non-Performing Asset) category.
Now the situation becomes serious. The lender considers the loan unpaid, and this status is often reported to credit bureaus. Once that happens, the borrower’s credit score can drop, sometimes sharply. Getting another loan or credit card may become difficult for a while.
Why should borrowers care?
Because the journey from SMA to NPA can happen faster than most people expect. One missed EMI becomes two, then three, and suddenly the loan looks much heavier and much harder to catch up on.
The impact isn’t only financial. It also affects:
- Future loan approvals
- Interest rates
- Access to credit
- Financial confidence
In short, it’s easier to fix payment delays early than later.
What should someone do if they’re struggling to pay?
The most helpful step and often the hardest is to talk to the lender. Many borrowers avoid calls when they’re behind, but lenders prefer early communication because it allows them to offer solutions.
Some lenders may allow:
- Adjusted EMI amounts
- A temporary pause
- A new repayment plan
- Partial repayments until things stabilise
These options are easier to get during the SMA stage than after the loan becomes an NPA.
Conclusion:
SMA is an alert that a repayment has been missed and needs attention. It signals that the loan is entering a stage where timely action is important. NPA, on the other hand, is a more advanced stage of delay and can affect future borrowing ability, credit score, and repayment flexibility.
If a payment is already overdue or likely to be delayed, addressing it early is the most practical step. Connecting with the lender and discussing available options can help create a manageable plan and prevent the situation from escalating further.