Module: General Practice
Q53: When an account is classified as a "Sub-standard Asset," what is the general provisioning requirement on the secured portion of the outstanding balance?
✅ Correct Answer: B
🎯 Quick Answer:
The general provision on the secured portion of a Sub-standard asset is 15%.Structural Breakdown: 1. Secured Portion: 15% provision.
2. Unsecured Portion: 25% provision.
Causal Reasoning: The 15% figure assumes that since the bank has collateral (security), the loss given default (LGD) will be lower than an unsecured loan, but the asset is still stressed, requiring a significant buffer compared to the 0.40% for standard assets.