Shreyansh, a Chartered Accountancy student, is part of an engagement team conducting audit of the Coimbatore branch of XYZ Bank under the guidance…

Shreyansh, a Chartered Accountancy student, is part of an engagement team conducting audit of the Coimbatore branch of XYZ Bank under the guidance of CA Dilip, the Engagement Partner. Shreyansh has been assigned the task of verifying provisions made for the branch's non-performing assets (NPAs) and classification of certain loans as on March 31, 2024, of which details are as under: Non-Performing Assets (NPAs): Name of Account NPA classification Outstanding amount as on March 31st, 2024 (In lakhs) Amount of provision made (In lakhs) Security Available AB Industries Doubtful (D1) 10.00 5.00 Fully secured Mars Traders Substandard asset 50.00 7.50 Fully secured RS Enterprises Doubtful (D2) 30.00 30.00 Fully secured NPS & Sons Loss 1.00 1.00 Only personal guarantee of proprietor (Net worth 50 lakhs) Housing Loan and Car Loan A borrower Mr. Shyam has availed following two loans from the branch: Housing Loan: EMIs are overdue for 120 days as on March 31, 2024.Car Loan: EMIs are overdue for 60 days as on March 31, 2024. Agricultural Advances The branch has provided a loan of 20 lakhs under the Kisan Credit Card (KCC) scheme to a farmer for the cultivation of paddy, which has a harvest period of 3–4 months. There has been no transaction in the account for the last 90 days. The branch has classified the loan as a Standard Asset. CA Dilip has clarified that the NPA classification has been verified and is in accordance with RBI guidelines. He instructed Shreyansh to focus on evaluating the adequacy of the provisions, considering RBI Guidelines mandate specific percentages for provisioning based on the NPA classification and the nature of the security.