Provisioning & IRACP Agent AI

INVOKED WHEN: month-end batch runs or CBS flags an account crossing a DPD threshold requiring classification review

• –Reads the CBS DPD position for every active loan and applies the IRACP classification rules: accounts at 90 DPD or more are classified Sub-Standard; accounts that have remained Sub-Standard for 12 months are classified Doubtful; accounts that have remained Doubtful for prescribed periods or where the recovery prospect is remote are classified Loss. Each classification is based on the DPD count alone — the IRACP rules are mechanical, not judgment-based.
• –Checks for upgrade eligibility: an account that was classified as NPA but has since regularised (all overdue amounts paid, account performing for at least the prescribed regularisation period under IRACP) is eligible for upgrade back to Standard. The agent identifies upgrade-eligible accounts and flags them for the authorised official's review — upgrading an NPA account is an equally regulated act as classifying one.
• –Produces the classification schedule — every account's current classification, the DPD basis for classification, and the change from the prior period's classification (new NPA, upgrade, no change). The schedule is the authorised official's review document before sign-off.

INVOKED WHEN: NPA classification schedule is finalised and provisioning requirements need to be computed

• –Applies the IRACP provisioning rates to each classified account: 15% for Sub-Standard (unsecured) / 15% for Sub-Standard (secured, reducing to nil for the secured portion where the security is current and adequately valued), 25% for Doubtful I (first year), 40% for Doubtful II (second year), 100% for Doubtful III and beyond, and 100% for Loss accounts. The rates are mechanical applications of the IRACP master circular — the agent does not apply judgment on provisioning adequacy.
• –For secured accounts, reads the current security valuation from the security valuation store and computes the net unsecured exposure (outstanding balance minus current security value) — because the IRACP provisioning rate applies to the unsecured portion, and the provisioning requirement for a secured NPA with adequate collateral is materially lower than for an unsecured one.
• –Computes the aggregate provisioning requirement and compares it to the current provisioning balance on the general ledger — identifying the provision shortfall or surplus. Where the required provision exceeds the current provision, flags the shortfall for the CFO to authorise a GL provisioning entry.

INVOKED WHEN: quarterly board compliance reporting cycle or RBI regulatory submission is due

• –Produces the formal IRACP compliance report: NPA ratios (Gross NPA, Net NPA) by portfolio segment and product, movement in NPA during the period (fresh NPAs, upgrades, write-offs, recoveries), provisioning coverage ratio, and a compliance note confirming that classification and provisioning have been applied in accordance with the IRACP master circular.
• –Tracks changes in the IRACP master circular through the RBI regulatory corpus — if RBI amends provisioning rates or classification criteria, the agent flags the change and updates the computation methodology before the next month-end run. IRACP compliance is only as current as the regulatory corpus.