While specific provisions would be as per the RBI guidelines on NPA provisioning, dynamic provisions would be the difference between the long run average expected loss of the portfolio for one year and specific provisions made during the year.
Thus, this will ensure that every year the charge to profit and loss account on account of specific provisions and dynamic provisions is maintained at a level of alpha times outstanding loans i.e., expected losses. As is observed from above, dynamic provisions are created only when the specific provisions are lesser than the expected losses.