Para 6.10 — MSO (A&E)
Original Rule Text
6.10 After all entries upto but not including the date on which interest becomes due have been made, a line will be drawn across the page. First the interest account of the past helf-year must be made up by deduction of the amount paid on account of interest from the demand on that account entered in
the "Amount due" column and by bringing down "Balance of Interest Due". Then a calculation must be done of the interest to be demanded or any overdue interest of the previous halfyear. Lastly, in the case of Register in Form A, the second and third columns of the "Calculation of Interest on Principal" must be totalled and the excess of the total of the second over the total of the third carried into the "Amount due" column. The total interest due and the total principal due will then be made up and the account will be opened for a new period. The account of Sinking Fund in form B will be similarly completed, at the same time, the amount of interest due being credited at the end of the period.
If the interest is payable yearly, instead of half-yearly, the account will be made up only once a year.
What This Means
At the end of each half-year (or year, if interest is annual), the loan account must be formally closed and reopened. This involves drawing a line after the last entry, calculating the interest due for the period, deducting any interest already paid, and carrying forward the balance of interest due. For loans in Form A, the interest on principal is totalled and the net amount carried to the 'Amount due' column. The sinking fund account (Form B) is similarly completed with interest credited at period-end.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1A line is drawn after the last entry before the interest due date to close off the period
- 2Interest account is made up by deducting amounts paid from the total interest demand
- 3Balance of interest due is carried forward to the next period
- 4For Form A loans, principal interest columns are totalled and net amount determined
- 5For annual interest loans, the account is made up only once a year instead of half-yearly
Practical Example
A loan of Rs. 40 lakh at 4% interest with half-yearly due dates on April 16 and October 16 is being maintained. On October 16, the loan accountant draws a line after the September 30 entry, calculates that Rs. 84,300 interest accrued on principal during the half-year, notes that Rs. 28,000 was already paid as interest during the period, determines the net interest due is Rs. 56,300, and carries this balance into the new period opening on October 17.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
What happens if interest is payable yearly instead of half-yearly?▼
How is overdue interest from a previous period handled?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.