Ajay (CA Job) (512 Points)
27 March 2011Hello Friends,
Can u tell, while conducting a final audit, how to verify a Term Loan for any defaults when it is at Floating Rate of interest? Would there be a repayment schedule pre fixed by the bank as in case of Fixed Rate of interest? Then how does the payer usually know how much to pay?
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 27 March 2011
in case of floating rate of interest, the interest portion is changed at every interval, and its intimated to the party, party is set free to pay the principal amount yearly set up in emi basis or in installments as they wish, but all such transactions are made with direct debit to the account maintained with the same bank.
you can ask the bank for details of pricipal and interest portion for any specific year or period
Ajay
(CA Job)
(512 Points)
Replied 27 March 2011
Thank u for ur reply....When u say direct debit, does it mean the bank will debit the account in which the loan money is held by the client?then, as long as there is balance in that account,the bank will automatically debit the interest portion is it? further, is it enough to ensure that in the e-banking statement the drawing power equals the Present balance outstanding?would that suffice?
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 27 March 2011
| Originally posted by : Ajay | ||
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Thank u for ur reply....When u say direct debit, does it mean the bank will debit the account in which the loan money is held by the client?then, as long as there is balance in that account,the bank will automatically debit the interest portion is it? further, is it enough to ensure that in the e-banking statement the drawing power equals the Present balance outstanding?would that suffice? |
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banks usually allow loans in relation to a bank account maintained with the bank branch, and deduct the interest from that account only, (NO EMI CHEQUES)
you have to ask bank for detailed statement of your loan interest and principal repayment break up for any specific year / period.
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