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CS Professional · Banking and Insurance - Laws and Practice · Analysis of Financial Statements of Banks

Sagar Bank's income statement shows: interest on advances Rs 600 crore, interest on investments Rs 200 crore, interest on balances with RBI Rs 20 crore, commission and exchange Rs 50 crore, and profit on sale of investments Rs 30 crore. Under the bank format, what is the 'Interest Earned' figure?

Interest Earned is Rs 820 crore, being interest on advances 600, income on investments 200 and interest on RBI balances 20. Commission and profit on sale of investments are other income, not interest earned, so they are excluded from this line.

  1. ARs 800 crore
  2. BRs 820 croreCorrect
  3. CRs 850 crore
  4. DRs 900 crore

Explanation

Interest Earned (Schedule 13) comprises interest/discount on advances and bills, income on investments, interest on RBI and inter-bank balances, and other interest: 600 + 200 + 20 = Rs 820 crore. Commission and profit on sale of investments are Other Income (Rs 80 crore); adding them gives 900, which is wrong.

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