Accounting Standards and Principles

Revenue Recognition

Interest Income on Portfolio loans

Interest income on loans given is recognised under the internal rate of return method. Income or any other charges on non-performing asset is recognised only when realised and any such income recognised before the asset became non-performing and remaining unrealised is reversed.

Interest Income on Deposits

Interest income on deposits with banks is recognised on a time proportion accrual basis taking into account the amount outstanding and rate applicable.

Loan Processing Fee

Loan processing fees are amortised over the tenure of the loan on straight-line basis.

Securitisation Income

Profit / premium arising at the time of securitization / assignment of loan portfolio is amortised over the life of the underlying loan portfolio / securities and any loss arising therefrom is accounted for immediately. Income from interest strip (excess interest spread) is recognized in the statement of profit and loss account net of any losses when redeemed in cash. Interest retained under assignment of loan receivables is recognized on realization basis over the life of the underlying loan portfolio.

Other Income

All other income is recognised on accrual basis.

Provision Policy for Loan Portfolio

Provision Policy for Loan Portfolio

1.Provisioning policy for loans to JLG
Asset Classification Arrear Period Provisioning %
Standard assets Overdue for less than 8 weeks Refer below
Sub-Standard assets Overdue for more than 8 weeks upto 25 weeks 50%
Loss assets Overdue for more than 25 weeks Written off


The above mentioned provision for standard assets is linked to Portfolio at Risk (PAR) as shown below

Portfolio at Risk Provisioning Percentage (% of Standard Assets)
0 – 1% 0.3%
Above 1% to 1.5% 0.50%
Above 1.5% to 2% 0.75%
Above 2% 1.00%

Provision on standard assets has been made in line with the NBFC-ND-SI Prudential Norms
The overall provision for portfolio loans determined as per the above mentioned provisioning policy is subject to the provision prescribed in the NBFC-MFI Directions. These Directions require the total provision for portfolio loans to be higher of (a) 1% of the outstanding loan portfolio or (b) 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of the aggregate loan installments which are overdue for 180 days or more.
Such additional provision created in order to comply with the NBFC-MFI Directions is classified and disclosed in the Balance Sheet along with the contingent provision for standard assets.
(2) Loans and advances other than loans to JLG are provided for at the higher of management estimates and provision required as per the NBFC-ND-SI prudential norms.
(3) Provision on securitized / managed portfolio is made as per the Company’s provisioning policy for portfolio loans mentioned in (i) above net of losses, if any and subject to the maximum guarantee given in respect of these arrangements.
(4) All overdue loans, where the tenure of the loan is completed and in the opinion of the management any amount is not recoverable, are written off.