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    Question

    Banks shall make provisions, with effect from the year

    ending March 31, 2003, on the net funded country exposures on a graded scale ranging from 0.25 to hellip;..
    A 4% Correct Answer Incorrect Answer
    B 5% Correct Answer Incorrect Answer
    C 10% Correct Answer Incorrect Answer
    D 50% Correct Answer Incorrect Answer
    E 100% Correct Answer Incorrect Answer

    Solution

    Banks shall make provisions, with effect from the year ending March 31, 2003, on the net funded country exposures on a graded scale ranging from 0.25 to 100 percent Banks are required to make provision for country risk in respect of a country where its net funded exposure is one per cent or more of its total assets. The provision for country risk shall be in addition to the provisions required to be held according to the asset classification status of the asset. However, in the case of lsquo;loss assetsrsquo; and lsquo;doubtful assetsrsquo;, provision held, including provision held for country risk, may not exceed 100% of the outstanding

    Risk category ECGC Classification Provisioning Requirement (per cent)
    Insignificant A1 0.25
    Low A2 0.25
    Moderate B1 5
    High B2 20
    Very high C1 25
    Restricted C2 100
    Off-credit D 100

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