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Banking Provisions

Sukhadeo (13 Points)

10 May 2007

Whether provisions made against Bad & Doubtful Advances, Standard Assets and Contigencies are reserves for Banks

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Abhijit Kanhegaonkar (78 Points)
Replied 10 May 2007

"provision" means any amount written off or retained by way of providing for depreciation, renewals and diminution in value of assets, or retained by way of providing for any known liability of which the amount cannot be determined with substantial accuracy:

Provided that any amount written off or retained by way of providing for depreciation renewals or diminution in value of assets not being an amount written off in relation to fixed assets [....] or any amount retained by way of providing of any known liability, is in excess of that which, in the opinion of the directors, is reasonably necessary for the purpose, [b]the excess is to be treated as a reserve and not as a provision[/b];