Question
Regarding the secured portion, what is the provisioning
requirement for an advance that has remained in the 'doubtful' category for one to three years?Solution
When an advance has remained in the 'doubtful' category for a period of one to three years, the provisioning requirement for the secured portion is 40%. This means that the bank is required to set aside an amount equivalent to 40% of the secured portion of the doubtful asset as a provision. This provisioning reflects the increased risk and uncertainty associated with such assets and helps banks mitigate potential losses.
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