CA M is appointed as the Statutory auditor of Fincorp Limited for the financial year 2023-24. This company is an NBFC covered under Non-Banking…

Provisioning Requirements: The provisioning requirement in respect of loans, advances and other credit facilities including bills purchased and discounted shall be as under: Categories of Non-Performing Assets: Provision required (%) Standard Assets: Every NBFC (covered under Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016) shall make 0.40% provisions for standard assets at 0.40 per cent by the end of March 2018 and thereafter, of the outstanding, which shall not be reckoned for arriving at net NPAs. Substandard Assets 10% Doubtful Assets (upto 1 to 3 Years) 30% Loss Assets 100% In the given situation, CA M is appointed as Statutory Auditor of Fincorp Limited, an NBFC covered under NBFC (covered under Non-Banking Financial Company - Systemically Important Non-Deposit taking Company and Deposit taking Company (Reserve Bank) Directions, 2016) for the financial year 2023-24. The Fincorp Limited has made the following provisioning in respect of loans, advances and other credit facilities as under: Categories of Non-Performing Assets: Balance outstanding as on 31st March, 2024 Provision required (in ₹) Provision made by the Co. Standard Assets 200 crores 0.40% 80 lakhs NIL Substandard Assets 15 crores 10% 1.5 crores 1.5 crores Doubtful Assets (upto 1 to 3 Years) 8 crores 30% 2.4 crores 2 crores Loss Assets 2 crores 100% 2 crores 2 crores Total Provision for NPA 6.7 crores 5.5 crores From the above, it can be concluded that provisioning for Substandard Assets and Loss Assets is in accordance with the prescribed RBI Prudential Norms whereas in case of Standard Assets and Doubtful Assets it is not as per provisioning norms. Thus, CA M is correct in his opinion that the company has not done the provisioning correctly.