Income from Investments
Interest and dividend on investments is usually accounted for at the head office. Such interest and dividend, therefore, may not appear in the profit and loss account of a branch. The related audit procedures described below would be relevant only in cases where interest/ dividend on investments is recorded at the branch under audit. Similarly, since only a few designated branches maintain accounts with RBI or are authorised to lend money at call and short notice, this item would appear in the profit and loss accounts of such branches only .
Profit on Sale of Investments: Investments are dealt in the course of banking activity and hence the net profit or loss on sale of investments is taken to profit and loss account. As investments are dealt with at the head office level, this item will not appear in the profit and loss account of a branch.
Profit/Loss on Revaluation of Investments: In terms of guidelines issued by RBI, investments are to be valued at periodical intervals and depreciation or appreciation in valuation should be recognised under this head. As investments are dealt with at the head office level, this item will not appear in the profit and loss account of a branch. The net profit or loss on account of the revaluation of investments held by the bank is reported under this head.