BY SUGATA GHOSH & ROMIT GUHA, ET BUREAU
MUMBAI | NEW DELHI: The plight of Reliance CommunicationsBSE -18.80 % is more serious than what credit rating agencies believe. The Anil Ambani-owned mobile phone operator has defaulted on its loan servicing obligations with more than 10 local banks, some of whom have categorised the exposure as "special mention account" in their asset books.
SMA assets are loans where the interest payment from a borrower is overdue: if a loan isn't serviced within 30 days after falling due, it's marked as SMA 1and if unpaid for 60 days or more, it's classified as SMA 2. The loan becomes non-performing asset (NPA) - which requires a bank to provide for the loan and take a knock on profitability - if interest is unpaid for 90 days.
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