Question
For more than three years (unsecured) doubtful advances,
provision will be made forSolution
As per the guidelines issued by the Reserve Bank of India (RBI), for doubtful advances, banks are required to make a provision based on the period for which the asset has remained doubtful. For unsecured advances that are considered doubtful for a period of more than three years, the provision to be made is 100%. This means that the bank must set aside an amount equal to 100% of the outstanding amount of the unsecured doubtful advance as a provision against possible losses.
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