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Bank has Gross Loans of Rs. 1000 mill with total Allowances for Loan Losses of Rs. 200 mill. 2 years ago the bank made a loan for Rs. 20 million to finance a retail showroom. Rs.5 mill were repaid

Bank has Gross Loans of Rs. 1000 mill with total Allowances for Loan Losses of Rs. 200 mill. 2 years ago the bank made a loan for Rs. 20 million to finance a retail showroom. Rs.5 mill were repaid before the borrower defaulted on the loan. The credit department of the bank has got the valuation of the retail showroom as Rs. 10 mill while sanctioning the loans however, fortunately, the bank is able to get Rs. 20 mill for the showroom during the auction. a. What is Net Loan before the write-off? b. After the write-off, what is the amount of Gross Loans, Allowances for Loan Losses and Net Loans? c. What will be the Gross Loans and Net Loans after the auction?

Apr 12 2021 View more View Less

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