PROGRESSIVE PROVISIONING Meaning and
Definition
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Progressive provisioning refers to a process or approach employed in various industries, particularly in the financial sector, to gradually set aside or allocate resources or assets according to predefined criteria or requirements. This method involves the gradual accumulation or allocation of resources over time to meet future needs or contingencies.
In financial institutions, progressive provisioning typically pertains to the practice of setting aside funds progressively as a precautionary measure against potential loan defaults or losses. In this context, banks and financial institutions allocate a certain percentage of their earnings to create reserves or provisions for potential credit losses or non-performing assets. These provisions are gradually increased over time to ensure that sufficient funds are available to cover any potential losses.
The purpose of progressive provisioning is to strengthen the financial position of institutions and safeguard against unexpected or adverse events, such as economic downturns or sudden defaults. By gradually building up reserves, financial institutions can mitigate risks and maintain stability in their operations. This practice also aids in regulatory compliance, as regulatory authorities often require banks and financial institutions to maintain certain levels of provisions as a buffer or safety net.
Overall, progressive provisioning serves as a proactive measure to prepare institutions for potential risks and uncertainties by gradually accumulating resources and ensuring financial stability.
Etymology of PROGRESSIVE PROVISIONING
The term "progressive provisioning" combines two words with distinct origins:
1. Progressive: The term "progressive" derives from the Latin word "progressus", which means "advance" or "proceed". It entered the English language in the late 16th century, describing the idea of moving forward or developing gradually.
2. Provisioning: The word "provisioning" has its roots in the Latin word "provisio", meaning "foreseeing" or "preparing". It refers to the act of supplying or providing something, typically food, resources, or support.
When combined, "progressive provisioning" refers to the concept of gradually supplying or provisioning resources, benefits, or services over time, often in response to changing needs or circumstances. This term is frequently used in fields such as economics, social development, and technology.
