New Delhi | January 12, 2026 |If the term ‘SMA’ has recently appeared on your credit report, ignoring it could turn out to be an expensive mistake. SMA, or Special Mention Account, is not a direct penalty imposed by banks, but an early warning signal indicating the onset of stress in loan or credit card repayments. It signals that delays have begun and, if not addressed in time, the account could soon slip into the Non-Performing Asset (NPA) category.
In an era where credit scores have become a primary measure of an individual’s financial credibility, understanding and managing SMA has become critical. Even a delay of a day or two is now captured in credit systems, with visible consequences for future loans, credit cards and interest rates. Under guidelines issued by the Reserve Bank of India, banks are required to identify and closely monitor accounts showing early signs of repayment stress.
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What is SMA and when is it reported?
SMA, or Special Mention Account, refers to loan or credit card accounts where repayments have been delayed, but the account has not yet turned into an NPA. As per regulatory norms, if an EMI or minimum credit card payment remains overdue for less than 90 days, the account is classified as SMA.
SMA is further divided into three stages. SMA-0 is reported when payments are overdue by 1 to 30 days and is treated as an initial warning. SMA-1 covers delays of 31 to 60 days, a stage at which banks begin more active monitoring. SMA-2 applies to delays of 61 to 90 days, when the risk of the account becoming an NPA is at its highest. Once the overdue period crosses 90 days, the account can be officially classified as an NPA.
How does SMA appear on a credit report?
In credit reports, SMA typically appears alongside the ‘Days Past Due’ (DPD) indicator. As the number of overdue days increases, the SMA category escalates accordingly. This information is regularly updated by credit information companies such as CIBIL, CRIF High Mark and others. Banks and non-banking financial companies (NBFCs) treat these indicators as key risk markers while evaluating fresh loan or credit card applications.
Impact of SMA on credit scores
According to experts, payment history carries the highest weightage in credit score calculations—around 30 to 35%. Once an account is tagged as SMA, the credit score begins to decline. While the impact at the SMA-0 stage may be limited, the drop becomes sharper as the account moves to SMA-1 and SMA-2. In many cases, a score of around 750 can fall below 600 at the SMA-2 stage, leading to loan rejections or approvals only at significantly higher interest rates.
RBI’s new rules and faster reporting
Under proposed regulatory changes, the RBI is pushing for more frequent updates of credit data. This means SMA-related changes will reflect faster in credit reports. However, the flip side is that timely repayments will also lead to quicker recovery in credit scores. Banks will now report incremental changes—such as movement from SMA-0 to SMA-1—allowing lenders to track borrower risk more accurately.
How to avoid SMA and repair the damage
Financial advisers say the simplest way to avoid SMA is maintaining repayment discipline. Setting up auto-debit mandates for EMIs and credit card bills, ensuring sufficient balance before due dates, and regularly checking credit reports are essential steps. If an SMA has already been reported, clearing overdue dues promptly can stabilise the account and help the credit score recover gradually.
Experts warn that ignoring SMA can pave the way for NPA classification, legal recovery action and restricted or expensive credit options in the future. Treated seriously and addressed early, SMA remains a warning—but left unattended, it can quickly become a lasting financial setback.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
