Friday, 10 August 2018

Company Registration in Tirupur

Company Registration in Tirupur

Company Registration in Tirupur


Prudential norms on conversion 

  • Where overdue interest is funded or outstanding principal and interest components are converted into equity, debentures, Zero coupon bonds or other instruments and income is recognized in consequence, full provision should be made for the amount of income so recognized. Equity, debentures and other financial requirements acquired by the way of conversion of outstanding principal and/ or interest should be classified in the AFS category and valued in accordance with the extant instructions on valuation of banks investment portfolio except to the extent that equity may be valued as per the market value; if quoted in cases where equity is not quoted, valuation may be valued as  per the market value ; if assets and in respect of sub-standard or doubtful assets, equity may be initially valued at Re.1 and at break up value after restoration or up gradation to standard category.
  • If the conversion of interest into equity, which is quoted, interest income can be recognized after the account is upgraded to the standard category at the market value of equity, on the date of such up gradation, not exceeding the amount of interest converted into equity. If the conversion of interest is into equity, which is not quoted, interest income should not be recognized .
  • In case of conversion of principal and /or interest into equity debentures, bonds, etc., such instruments should be treated as NPA in the same asset classification category as the loan of the loan's classification is sub-standard or doubtful on implementation of the restructuring package and provision should be made as per the norms. Consequently, income should be recognized on these instruments only on realization basis. The income in respect of unrealized interest which is converted into debentures or any fixed maturity instruments would be recognized only on redemption of such instruments. 
  • Banks may reverse the provisions made towards the income recognized at the time of conversion of accrued interest into equity, bonds, debentures etc., when the instrument goes out of balance sheet on sale/realization of value/maturity.
For Company Registration in Tirupur -> Click here.

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