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Banking Difficulties

Manav Sagar (Articled asssisstant) (26 Points)

29 October 2009

How much provision is required for Doubtful asset for more tha 3 years is it 100% or 50% & if the asset is secured by DIGC/ECGC Cover than do we need to make any provision

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sivaram (Asst Mgr-Taxation) (6918 Points)
Replied 29 October 2009

this is a good question as i want to know the answer .my view is since it is covered by DIGC/ECGC no provision would be required if 100%risk is covered

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triumph-CMA (Chartered Accountant) (503 Points)
Replied 29 October 2009

For Doubtful assets

If it is not secured 100% provision is made.

For secured portion

if doubtful up to one year 20%

If doubtful more than 1 year but upto three years 30%

More than 3 years. 100%

triumph-CMA (Chartered Accountant) (503 Points)
Replied 29 October 2009

In the case advances guaranteed by DICGC or ECGC provision is made for the balance in excess of amount guaranteed.

While creating provision for doubtful assets realisable value of securities shuld be first deducted from the outstanding balance.

In case of sub standars assets a general provision of 10% on total outstanding is made without making any allowance for DICGC or ECGC cover and securities available.

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