Interest elements in loan agreement _mauritius

Loan Agreement & Interest Clause If the loan agreement explicitly mentions interest payable, it implies a contractual obligation. Even if interest was not claimed or received, the accrual principle in accounting requires recognition of income when it's earned—not just when received. 

Potential Regulatory Concerns Under ODI guidelines, non-receipt or non-recording of interest may raise questions with the Reserve Bank of India (RBI), especially if the loan was approved with interest terms. Failure to reflect accrued interest in the books of account could be seen as non-compliance with accounting standards and ODI reporting norms. 

Accounting Implications The parent company should ideally record accrued interest as income, even if not received. Absence of entries might lead to scrutiny during audits or regulatory reviews. 

 What You Can Do Review the loan agreement and assess whether interest should have been accrued annually. Consult a qualified chartered accountant or legal advisor familiar with ODI and FEMA regulations. Consider voluntary disclosure or rectification if you suspect non-compliance.

Grateful. 

Actually our auditor also missed out. Can Mauritius based WOS having business Losses since incorporation, can approach Indian parent unlisted public ltd co to waive interest with retro effect.

Ultimately their Losses would increase with interest booking and the same would be transmitted to Indian parent- Group company and family owned.

Please guide 

Regards