Interest, balances and month length
Use worked examples to understand 28/29/30/31-day periods, due interest and contractual compounding.
Silent illustrated explainer with on-screen instructions and English captions. Fictional examples; not a recording of saved transactions. Reviewed 10 November 2026.
Step-by-step guide
Step 1 of 7
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.
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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.
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.
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.
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.
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.
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.
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.