PRUDENTIAL NORMS ON INCOME RECOGNITION

On an account turning NPA, banks should reverse the interest already charged and not collected by debiting Profit and Loss account, and stop further application of interest. However, banks may continue to record such accrued interest in a Memorandum account in their books, as is the practice currently followed by some banks. For the purpose of computing Gross Advances, interest recorded in the Memorandum account should not be taken into account.