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CMA Final · Corporate Financial Reporting · NBFCs - Provisioning Norms, Accounting and Reporting

Under the RBI's Scale Based Regulation, an NBFC's income recognition norms require that income on a non-performing asset should be:

Income on non-performing assets is recognised only when it is actually received, not on an accrual basis. This prevents overstating profit from interest that is unlikely to be collected, and any previously accrued but unrealised income is reversed.

  1. Arecognised only when actually receivedCorrect
  2. Baccrued monthly at the contractual rate
  3. Crecognised on due basis irrespective of receipt
  4. Ddeferred until the asset is upgraded and then recognised in full

Explanation

Income recognition norms for NBFCs require that income from NPAs be recognised only on actual receipt (cash basis). Accruing it would overstate profits. Interest accrued earlier and not collected must be reversed.

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