Answer-How much provision is required for an asset which is there in a doubtful category upto 12 months?

Question

Accepted Answer

Doubtful assets  middot 100 percent of the extent to which the advance is not covered by the realisable value of the security to which the bank has a valid recourse and the realisable value is estimated on a realistic basis. middot In regard to the secured portion, provision may be made on the following basis, at the rates ranging from 25 percent to 100 percent of the secured portion depending upon the period for which the asset has remained doubtful      Period for which the advance has remained in lsquodoubtfulrsquo category     Provisioning requirement       Up to one year    25      One to three years    40      More than three years    100

How much provision is required for an asset which is

Solution

Relevant for Exams:

Period for which the advance has remained in lsquo;doubtfulrsquo; category	Provisioning requirement (%)
Up to one year	25
One to three years	40
More than three years	100