Banking · Asset Classification and Provisioning
In a Statutory Audit of a public sector bank, the auditor evaluates the provisioning requirements for various categories of assets. If a loan account has been classified as Doubtful-2 (D-2) for a period of two years as of March 31, and the value of the security is 40 percent of the total outstanding balance, what is the total provision that must be held against this account as per the latest RBI IRAC norms?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 125 percent on the secured portion and 50 percent on the unsecured portion if the borrower is in the infrastructure sector.
- 2100 percent provision on both the secured and unsecured portions regardless of the duration of the default.
- 340 percent on the secured portion and 100 percent on the unsecured portion of the total outstanding amount.✓
- 420 percent on the secured portion and 100 percent on the unsecured portion of the total outstanding amount.
Correct answer
40 percent on the secured portion and 100 percent on the unsecured portion of the total outstanding amount.
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