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On detecting a fraud a bank may spread the provision over up to:
AFive quarters
BEight quarters
CFour quarters
DNine quarters
Answer & Solution
Correct answer: C. Four quarters
1. The whole amount is normally provided at once.
2. Spreading it smooths the effect on quarterly profit.
3. The spread may not exceed four quarters.
_Source: RBI Master Circular, Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances_
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