Banking Difficulties

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How much provision is required for Doubtful asset for more tha 3 years is it 100% or 50% & if the asset is secured by DIGC/ECGC Cover than do we need to make any provision

Replies (7)

this is a good question as i want to know the answer .my view is since it is covered by DIGC/ECGC no provision would be required if 100%risk is covered

 

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 For Doubtful assets

If it is not secured 100% provision is made.

For secured portion

if doubtful up to one year                                             20%

If doubtful more than 1  year but upto three years   30%

More than 3 years.                                                          100%

 In the case advances guaranteed by DICGC or ECGC provision is made for the balance in excess of amount guaranteed.

While creating provision for doubtful assets realisable value of securities shuld be first deducted  from the outstanding balance.

In case of sub standars assets a general provision of 10% on total outstanding is made without making any allowance for DICGC or ECGC cover and securities available.

Provision on advances classified as doubtful is increased to 100% from 50% w.e.f. March 31, 2005

Dear Manav and Sivaram

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