How do I make an NPA provision?

Non Performing Asset (NPA) provisions can be made by banks without making any allowance for DICGC/ECGC guarantee cover and securities available,a general provision of 10 percent on the total outstanding should be made. You can read about the Non Performing Assets (NPA) – What is the meaning of NPA? [UPSC Economics Notes] in the given link.

On a global loan portfolio basis, on standard assets, the banks should make a general provision of a minimum of 0.25 percent.

Further readings:

  1. RBI – Reserve Bank of India [UPSC Indian Economy Notes]
  2. Bad Banks – Idea Proposed by Indian Banking Association (IBA) Due to COVID-19

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