What is finance costs?

Finance Costs
The following break up of finance costs is required to be disclosed in the notes :
  1. Interest expense
  2. Other borrowing costs
  3. Applicable net gain/ loss on foreign currency transactions and translation.
  1. Interest expenses : it includes interest on borrowings from banks and others, interest on debentures, bonds or similar instruments.
  2. Other borrowing costs include commitment charges, loan processing charges, guarantee charges, loan facilitation charges, discount/premium on borrowings and other ancillary cost.
  3. Thus, gain/ loss on foreign currency transactions to be shown under 'finance costs' should be limited to this extent. As regards other such foreign exchange loss/ gain, it should be shown separately under appropriate head.

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