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NOTE Silent illustrated V1 explainer. Fictional examples; not a transaction recording.


1
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Start with the explicit terms. Check the rate unit, time
convention, principal basis and as-of date. Monthly collection
is separate from how interest accrues. These examples assume
unchanged INR 100,000 principal and no charges.


2
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Compare Actual/365 periods. At 12% annual simple interest,
Actual/365 gives INR 920.55 for 28 days, 953.42 for 29, 986.30
for 30 and 1,019.18 for 31. Calculate the whole period before
rounding.


3
00:00:32.000 --> 00:00:48.000
Keep daily and monthly amounts distinct. On unchanged principal,
Actual/365 has the same unrounded daily amount in every month.
Longer periods earn more interest. A principal repayment, new
advance or rate change splits the calculation into dated
segments.


4
00:00:48.000 --> 00:01:04.000
Use calendar months when agreed. A separate 1% calendar-month
agreement earns INR 1,000 per complete anchored month on
unchanged INR 100,000. Partial months use that anchored month’s
actual length. Annual-to-monthly conversion must be explicitly
selected.


5
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Check leap years and due dates. Actual/365 keeps 365;
Actual/actual ISDA uses 365 or 366 by calendar year. Retained
due days return after February. An explicit last-day-of-month
rule is a separate choice.


6
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Distinguish accrued, due and capitalised. Accrued interest is
earned but not yet due. Due interest is payable. Only permitted
capitalisation moves due unpaid interest into a capitalised
balance; further interest on it requires an explicit agreement
rule.


7
00:01:36.000 --> 00:01:52.000
Reconcile outstanding debt once. Total outstanding is cash
principal plus capitalised interest, due interest, accrued
interest and charges. Paid and waived amounts are history.
Credit stays separate by lender and currency.