Banks Allowed To Recognise Income On Accrual Basis

Mumbai, February 27: | Updated: Feb 28 2003, 05:30am hrs
The Reserve Bank of India (RBI) has allowed banks to recognise income on accrual basis in respect of income recognition, asset classification and provisioning for projects under implementation involving time overrun.

After reviewing the suggestions of some banks, the apex bank has modified the guidelines it issued in its circular dated May 28, 2002, which envisaged that that they should not recognise income on accrual basis in respect of the above projects, RBI said in a notification to commercial banks on Thursday.

The May 28, 2002, circular envisaged that the projects under implementation would be grouped under three categories for determining the date when the project ought to be completed and the manner in which the asset classification of the underlying loan should be determined.