*  *  *  The contributions made by Mrs Usha Janakiraman and Mrs Tariqa Singh are gratefully acknowledged. Thank you very much for inviting me to this conference to share with you my understanding of the underlying concepts and principles of dynamic provisioning. A discussion paper on the subject was brought out by the Reserve Bank of India (RBI) in March 2012.
We are still in the process of examining the comments received from banks and other stakeholders and it may take us a while to finalise anything in this regard. Why make provisions? Let me start the discussion with a question: why make provisions? To my mind provision is an accounting concept.