ECGC/DICGC

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CA Harit Kapoor (Querist)
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13 February 2010 can ne1 explain 2 me the concept of ecgc/dicgc cover in case of banking companies??....as to why we create such a provision???

DEEPIKA GOEL

DEEPIKA GOEL (Expert)
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14 February 2010 In case of advances guaranteed by ECGC or DICGC, provision is required to be made only for the balance in excess of the amount guaranteed by these corporations after deducting the realizable value of the security if the banks hold a security in respect of an advance guaranteed by ECGC/DICGC.
(A) Amount outstanding
(B) Less:- realizable value of security
(C) Unsecured Portion (A-b)
(D) Provision required for unsecured portion @100%
(E) Provision required for secured portion @ 20/30/50 % (if doubtful as per NPA norms)
(F) Total (D+E)
(G) Less:- ECGC/DICGC cover
(H) Total provision required (E-G)

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