Current Maturities explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A five-year loan in its final year is not a five-year loan on the balance sheet. Schedule III splits it — but the definition that governs the split looks backwards, to origination.
The split
Ind AS Schedule III requires presenting "current maturities of long-term debt" under "current borrowings". The mechanics:
- the portion of non-current borrowings due for payment within twelve months of the reporting date is classified under current borrowings; and
- the balance amount is classified under non-current borrowings.
Long-term debt is specified in Ind AS Schedule III as a borrowing having a period of more than twelve months at the time of origination.
That backwards-looking test matters because it decides which line item the current portion carries. A five-year term loan in its final year is current maturities of long-term debt — it originated with a term over twelve months. A nine-month working capital loan taken during the year is simply a current borrowing — it never was long-term debt.
Both sit within current borrowings, and both are due within twelve months, but only the first is a current maturity. The distinction preserves information about the company's term funding profile that a purely remaining-maturity presentation would erase.
Contrast this with bank deposits on the asset side, where the guidance note directs the opposite: remaining maturity of more than twelve months determines whether a deposit sits in other financial assets. The two tests are not interchangeable.
What a term loan is
The phrase "term loan" has not been defined in the Schedule III. The working description: term loans normally have a fixed or pre-determined maturity period or a repayment schedule.
The ICAI Guidance Note on CARO 2020 supplies an industry marker: in the banking industry, loans with repayment period beyond thirty-six months are usually known as term loans. And it draws the exclusion — cash credit, overdraft and call money accounts or deposits are therefore not covered by the expression "term loans".
A further characteristic: term loans are generally provided by banks and financial institutions for acquisition of capital assets which then become the security for the loan — that is, end use of funds is normally fixed.
The other borrowing categories
| Category | What it covers |
|---|---|
| Deferred payment liabilities | Any liability for which payment is to be made on deferred credit terms — for example deferred payment for acquisition of property, plant and equipment |
| Deposits | Deposits accepted from public and inter-corporate deposits which are in the nature of borrowings |
| Loans from related parties | Subject to all the disclosure requirements of non-current borrowings |
| Liability component of compound financial instruments | Carries the borrowings disclosures to the extent applicable |
The current liabilities list
On the face of the balance sheet, current liabilities run: financial liabilities — borrowings; lease liabilities; trade payables, split into total outstanding dues of micro enterprises and small enterprises and of creditors other than those; and other financial liabilities — followed by other current liabilities, provisions and current tax liabilities (net).
Lease liabilities appear as their own line here too, separate from borrowings, mirroring the non-current side.
Common mistakes
- Determining long-term debt by remaining rather than original maturity.
- Treating cash credit and overdraft facilities as term loans.
- Leaving current maturities within non-current borrowings.
- Reporting current maturities and ordinary short-term borrowings as one undifferentiated figure.