calculated using effective interest method

Accordingly, the guidance in this respect is very clear under Ind-AS that loans advanced at zero or concessional rates of interest are to be measured at fair value which is to be calculated using effective interest method.Accordingly, the interest income is recognised in the books of accounts as per the market rate and not the interest rate as per the concessional terms. However, the principal for the purpose of calculation of interest shall be the amortised cost and not the principal amount outstanding.

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