Economics · Banking Accounts
As per RBI guidelines and the Banking Regulation Act, 1949, what is the specified accounting treatment for income generated by a bank's Non-Performing Assets (NPAs)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is recognized as a Contingent Asset and disclosed in the notes to accounts, not in the Profit and Loss Account.
- 2It is recognized on a cash basis (realization basis), where income is recorded only when it is actually received by the bank.✓
- 3It is completely ignored and not recorded in the books of accounts until the asset is fully recovered.
- 4It is recognized on an accrual basis and disclosed under Schedule 13 - Interest Earned, provided full provisioning has been made.
Correct answer
It is recognized on a cash basis (realization basis), where income is recorded only when it is actually received by the bank.
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