Question

What percentage of provision is required on performing assets?
a. 10
b. 40
c. 0.40
d. 25​

Answer 1

Answer:

it will  be d.

Explanation:

Answer 2

Concept Introduction:

A performing asset is one for which: (a) no payment due thereunder has indeed been done other than on the due date; (b) the actual net cash flow derived from the related Mortgaged Property or Underlying Mortgaged Property is sufficient to meet all payments due on such Asset (and any related Senior Debt); or (c) such Asset benefits from reserve funds or b the structural features appropriate to the Lender that resolve such inadequacies.

Given Information:

a.10

b.40

c.0.40

d.25

To Find:

Percentage provision requirement.

Solution:

Lenders must make a 100 percent provision for the unsecured component of the loan when it comes to assets. If the asset has been non-performing for up to a year, the necessary provision for the secured component of the loan is 25%, 40% for one to three years, and 100% for more than three years.

Therefore, the correct option is d.25.