Question
Under CGTMSE, what is the general provisioning
requirement on loans covered under guarantee in case of default?Solution
Under CGTMSE, if a borrower defaults, the bank receives guarantee coverage, but is still required to make provision on the uncovered portion, and often the first 25% of the defaulted amount must be provided as per provisioning norms (subject to RBI/CGTMSE updates). Exact provisioning can vary by scheme and must follow latest CGTMSE/RBI circulars.
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