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XYZ Bank charges interest on its Advances on 30.03.20XX and the account classification is done on 31.03.20XX (i.e Classification of NPA) and if account become NPA (i.e sub-standard on 31.03.20XX).
Whether to Reverse the Interest Credited in the account of the NPA (Sub-Standard.) on 31.03.2016. |
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Sir Please check the reason why the account has become NPA and if it is just due to turnover or recovery whcih was done before completion of audit it could be reclassified as standard by giving MOC otherwise interesrt has to be reversed. |
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If account classified as NPA on any date then there will be no debits to the account permissible. Either it may be service charge, interest on loan account, or any other charge. only exception is that if there is some recovery in accounts than to that extent you are not required to reverse the debit charge. |
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Overdue Interest/Charges (which is not recovered) as on the date of NPA needs to be reverse as per IRAC Norms. |
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