Financial Awareness - Risk, Stability & Emerging Finance
Provisioning for Non-Performing Assets (NPAs) is primarily done to:
Provisioning for Non-Performing Assets (NPAs) is primarily done to:
medium Q8 of 15
Step-by-Step Solution
Step 1: Understand provisioning purpose
Provisioning is setting aside funds to cover expected losses from NPAs.Step 2: Analyze options
Provisioning reduces profits but safeguards bank’s financial health by covering bad loan losses.Final Answer:
Cover potential losses from bad loans → Option CQuick Check:
Provisioning purpose = cover losses from NPAs ✅
Quick Trick: Provisioning protects banks from loan defaults.
Common Mistakes:
- Thinking provisioning increases profits or affects interest rates.
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