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

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

Profit / Premium arising at the time of securitisation 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.

All other income is recognised on accrual basis.

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%	0.25%
Above 1% to 1.5%	0.50%
Above 1.5% to 2%	0.75%
Above 2%	1.00%

The overall provision for JLG 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 JLG loans is to be higher of 1% of the outstanding portfolio or 50% of the aggregate loan installments which are overdue for more than 90 days and less than 180 days and 100% of aggregate loan installments which are overdue for more 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 for losses arising under securitisation / managed arrangements is made as higher of the incurred loss and provision as per the Company’s provisioning policy for JLG loans mentioned above and subject to the maximum guarantee given in respect of these arrangements.
(4) All overdue loans, where tenure of the loan is completed and in the opinion of the management any amount is recoverable, are written off.