Q. Whether this account is NPA?

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Question added Jan 2 Bank / Insurance / Stock / Debtors Audit By Sivaraman.A.R., CA, C.S.Tower, Stadium Bye Road, Palakkad

Bank sanctioned a CC loan on 01.07.2023. Limit Rs 10 lakh

iven below is the transanction. Whether this account is NPA as on 01.10.2023? 

01.07.2023 Withdrawal Rs 500,000 Dr

31.07.2023 Interest charge by bank – Rs 5000 Dr

31.08.2023 Interest charge by bank – Rs 5000 Dr

31.08.2023 Cash deposit – Rs 10000 Cr

30.09.2023 Interest charge by bank – Rs 5000 Dr

Balance 30.09.2023 – Rs 505000 Dr

As on 31.08.2023, it is not NPA.. I am clear.

But as on 01.10.2023, whether NPA?

As per RBI Master Circular - 2.2.1.ii -  Here credits are not sufficient to cover Interest charged during prev 90 days periods. So I think it is NPA.

But bank is saying only one month interest is is due and that too for 1 day, So not NPA. 

Please clarify.

Concept by CA Pramod Jain

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