While verifying provisions of advances of a branch of HFC Bank as part of statutory branch audit, CA Mini notices that credit facilities consisting…

The provision for advances falling in D2 category is required @ 40% of secured portion and 100% of unsecured portion. Therefore, provision in above case is arrived as under: - Outstanding balance as on 31.3.25 150 lakhs Less: Value of security 100 lakhs Unsecured portion 50 lakhs Therefore, outstanding balance of 150lakhs is secured to the extent of 100lakhs and balance 50lakhs is unsecured. Provision calculation 40% of secured part i.e., 40% of 100lakhs 40 lakhs 100% of unsecured part i.e.,100% of 50lakhs 50 lakhs Required provision 90 lakhs In view of above, provision made by branch is not proper. It should have made provision of 90lakhs instead of 75lakhs.