According to RBI’s prudential norms, what is the

Solution

Under RBI’s Income Recognition and Asset Classification (IRAC) norms, banks are required to make general provisions against non-performing assets (NPAs). For substandard assets (i.e., accounts classified as NPAs for less than or equal to 12 months): • A general provision of 15% of the total outstanding is mandated. • This provision is calculated without considering any ECGC (Export Credit Guarantee Corporation) guarantee cover or the value of securities available. • The intent is to create a buffer against potential losses, ensuring that banks remain adequately capitalized and risk-resilient. Therefore, the required general provision is 15%.