Page 213 - DCOM208_BANKING_THEORY_AND_PRACTICE

Banking Theory and Practice

Notes
Table 13.2: Tier I
Period for which the advance has remained in Provision Requirements
‘doubtful’ category
Up to one year 20 per cent
One to three years 30 per cent
More than three years (D-III)
(i) Outstanding stock of NPAs as on March 31, 2010 – 60 per cent with effect from
March 31, 2011
– 75 per cent with effect from
March 31, 2012
– 100 per cent with effect from
March 31, 2013
(ii) Advances classified as ‘doubtful for more than – 100 per cent
three years’ on or after April 1, 2010

Source: http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7370#cla

Table 13.3: Tier II

Period for which the advance has remained in Provision Requirements
‘doubtful’ category
Up to one year 20 per cent
One to three years 30 per cent
More than three years (D-III) 100 per cent
Source: http://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?id=7370#cla
(c) The provisions towards "standard assets" need not be netted from gross advances but
shown separately as "Contingent Provision against Standard Assets" under "Other Funds
and Reserves" (item 2) (viii) of Capital and Liabilities} in the Balance Sheet.
(d) If due to changes in the regulatory requirements on provisions to be maintained by banks,
the provisions held by banks exceed what is required to be held by banks, such excess
provisions should not be reversed. In future, if by applying the revised provisioning
norms, any provisions are required over and above the level of provisions currently held
for the standard category assets; these should be duly provided for.

(e) In case banks are already maintaining excess provision than what is required/prescribed
by Statutory Auditor/RBI Inspection for impaired credits under Bad and Doubtful Debt
Reserve, additional provision required for Standard Assets may be segregated from Bad
and Doubtful Debt Reserve and the same may be parked under the head "Contingent
Provisions against Standard Assets" with the approval of their Board of Directors. Shortfall
if any, on this account may be made good in the normal course.
(f) The above contingent provision will be eligible for inclusion in Tier II capital.

13.4.4 Loss Assets

(a) The entire assets should be written off after obtaining necessary approval from the
competent authority and as per the provisions of the Cooperative Societies Act/Rules.
If the assets are permitted to remain in the books for any reason, 100 per cent of the
outstanding should be provided for.

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