Can Bank Can Declare Account as NPA on 90th Day? Know what Court said

Pradeep SinghDecember 8, 2025Last Updated: December 8, 2025

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Bank Can Declare Account as NPA on 90th Day, Says Delhi High Court

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Can a bank declare a loan account as NPA on 90th day? The Delhi High Court has said that a bank is not wrong if it declares an account as a Non-Performing Asset (NPA) on the 90th day of irregularity. Such a declaration cannot be called premature.

As per RBI rules, an Overdraft (OD) or Cash Credit (CC) account becomes an NPA when the outstanding amount remains above the approved limit for more than 90 days.

The loan borrowers argued that Canara bank had declared their accounts as NPA before the 90-day period was completed. They said the Debt Recovery Appellate Tribunal had also agreed with them.

However, the High Court found that the OD and CC accounts became irregular on 31 December 2012. The outstanding amounts were much higher than the allowed limits. The excess was not small and did not stop for a short time. Because of this, the bank declared the accounts as NPA on 31 March 2013.

The Court said that even if 31 March 2013 is taken as the 90th day, declaring the account as NPA on that same day is valid. It cannot be called premature. The irregularity was clear and continuous.

The Court also said that RBI rules do not allow banks to delay NPA classification after the 90-day period is over. Once the full 90 days are completed, the bank must declare the account as NPA.

The Court explained that the 90-day count starts from the day after the account first becomes irregular. If the problem continues without any break for the full 90 days, the account must be treated as impaired. The bank must then classify it as an NPA.

The Court also noted that the borrowers failed to show any proof that they regularised the account. They did not show that interest was paid or that the account was brought back within limits during this period.

The Court said that once the bank proves continuous irregularity, the burden shifts to the borrower. In this case, the borrowers failed to prove that the NPA classification was wrong.