Microlesson · 5-min read

Bank Audit - Income from Investments

# Income from Investments

## Interest Income on Investments

Excludes income earned by way of dividends from subsidiaries and joint ventures (abroad/in India)
Broken period interest paid on securities purchased - netted off from interest income on investments
Amortisation of premium on SLR investments - netted off from interest income on investments

## Profit/Loss on Sale of Investments

Net profit or loss on sale of investments is taken to P/L.

## Profit/Loss on Revaluation of Investments

Taken to P/L.

Worked example

### Example 1

Example: A bank purchases a G-Sec mid-coupon and pays Rs. 50,000 broken period interest. At year-end, it receives Rs. 1,20,000 coupon. The Rs. 50,000 broken period interest paid is netted off, so interest income on investments shown = Rs. 70,000.

⚠️ Common exam mistakes

Including dividend income from subsidiaries within 'interest income on investments'
Failing to net off broken period interest paid and amortisation of premium on SLR investments

Reference:

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Bank Audit - Income Recognitio

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