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      Question

      What type of provision is maintained by banks to show

      the percentage of total non-performing assets that are covered by provisions, acting as a measure of a bank's buffer against loan losses?
      A Statutory Liquidity Ratio Correct Answer Incorrect Answer
      B Capital Conservation Buffer Correct Answer Incorrect Answer
      C Provisioning Coverage Ratio (PCR) Correct Answer Incorrect Answer
      D Net NPA Ratio Correct Answer Incorrect Answer
      E Countercyclical Capital Buffer Correct Answer Incorrect Answer

      Solution

      The Provisioning Coverage Ratio (PCR) represents the ratio of provisioning to gross NPAs and indicates the extent to which a bank has set aside funds to protect itself from potential credit defaults.

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