Vehicle financier Mahindra & Mahindra Financial Services on Wednesday reported a 29% drop in its net profit during the July-September quarter at to Rs 146 crore compared to a year earlier, as the firm made an additional provision of Rs 61 crore in order to meet ahead of schedule the new bad loan norms of the Reserve Bank of India.
“Effective from the current quarter ended 30th September, 2015, the Company as a prudent practice has also decided to accelerate the recognition of NPAs in a phased manner so as to meet the revised NPA norms of 4 months before 31st March, 2017,” the company said in its release.
Provisions jumped 50% on year to Rs 277 crore during the quarter from Rs184 crore in the corresponding quarter last year.
Earlier this year, the RBI had stipulated that non-banking finance companies will gradually move to the non-performing asset guidelines prescribed for banks currently. As per this, NBFCs will have to classify accounts as NPA if payments are overdue beyond 180 days as against 270 days currently.
The company’s operating profit at Rs 503.3 crore was flat from a year ago. Total Income increased by 5% at Rs 1438 crores during the quarter as against Rs 1369 crores in the corresponding quarter last year.