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    Question

    According to the income recognition policy, when can interest on advances against Term Deposits, NSCs, KVPs, and life insurance policies be taken to the income account?

    A If the advances are secured against government-guaranteed accounts Correct Answer Incorrect Answer
    B Only if the advances are rescheduled or renegotiated Correct Answer Incorrect Answer
    C Only if the borrower agrees to make the payment Correct Answer Incorrect Answer
    D If adequate margin is available in the accounts Correct Answer Incorrect Answer
    E On the due date, regardless of the margin available in the accounts Correct Answer Incorrect Answer

    Solution

    According to the income recognition policy, interest on advances against Term Deposits, National Savings Certificates (NSCs), Kisan Vikas Patras (KVPs), and life insurance policies can be taken to the income account on the due date, provided adequate margin is available in the accounts. This means that the borrower should maintain a sufficient margin or collateral to cover the advances, ensuring a certain level of security for the bank. Without adequate margin, the interest cannot be recognized as income.

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