Banking · Asset Classification and Income Recognition
Under the Income Recognition and Asset Classification (IRAC) norms prescribed by the RBI, how should interest on Non-Performing Assets (NPAs), such as Sub-Standard assets, be recognized in the final accounts?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Credited to a separate Interest Suspense Account and shown as a current asset in the Balance Sheet.
- 2Recognized as a direct addition to the bank's Tier-1 Capital Fund.
- 3Recognized only on a cash basis and not credited to the Profit and Loss Account unless actually received.✓
- 4Recognized on an accrual basis and credited directly to the Profit and Loss Account.
Correct answer
Recognized only on a cash basis and not credited to the Profit and Loss Account unless actually received.
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