hi Friends,

recently i took loan on hdfc bank with 17.88% amount of Rs17,400 for 12 months. but i dont known how they calculated. but iam paying monthly Rs 1590 Emi each month. i wnt to know how was caculation? please explain me?

Skip to content# what is calculation of interest of banks? how they will calculate interest ?

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hi Friends,

recently i took loan on hdfc bank with 17.88% amount of Rs17,400 for 12 months. but i dont known how they calculated. but iam paying monthly Rs 1590 Emi each month. i wnt to know how was caculation? please explain me?

The effective rate of interest depends on the periodicity the interest is calculated.

If it is calculated annually, the quoted rate of interest is the effective rate.

If it is calculated on quarterly basis, the effective rate of interest is higher than the quoted rate.

If it is calculated monthly, the effective rate is still higher.

You have to find out from your bank at what intervals at which they calculate the interest.

Go to MS Excel>formulae>function>PMT

Fill in the figures like Rate =17.88%/12, Nper = 1*12, PV = 17400

you will get your figure

Bank calculate interest every three months as a compounding rate.