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      Question

      An account classified as Sub-standard has accrued

      interest of ₹1.2 crore during the year, which has not been actually received. How should this interest be treated in the Profit & Loss account of the bank?
      A Recognise fully as income Correct Answer Incorrect Answer
      B Recognise partially Correct Answer Incorrect Answer
      C Recognise on accrual basis Correct Answer Incorrect Answer
      D Reverse and book only on cash basis Correct Answer Incorrect Answer
      E Capitalise to loan account Correct Answer Incorrect Answer

      Solution

      For NPAs, interest is recognised only on cash basis.

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