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EMI Calculator

Calculate your Loan EMI & Total Interest Due

Loan Amount
Loan Amount:
Interest Rate in %:
Processing Fee: (% of loan amount)
Would you like to make Pre-payments?
Pre-payment Frequency
Pre-payment starts in
Pre-payment amount
Loan Completion Month
Pre-payment Fee %
Pre-payment Applies to

Your Monthly Loan EMI: Sprite 4,292

Monthly amount paid to your Loan provider

Break-up of all total amount payable
Loan Amount
Total Interest Due
Processing Fee
Loan Amount Via EMI
Loan Amount Prepaid
Total Interest
Processing Fee
Pre-payment Fee
Total Amount Payable
Your loan details as specified by you
Loan Amount
6 Months
Interest Rate
Processing Fee
Is your Credit Score good enough for getting a loan or card?

Your Amortization Details (Yearly/Monthly)

Your debt repayment schedule in regular instalments over a period of time.

Tab amortization
Principal Paid Interest Paid Outstanding Loan BalanceO/S Balance(Without Pre-payment) O/S Balance(With Pre-payment)
Year Principal Paid(A) Interest Paid(B) Total Payment (A+B) Outstanding Loan Balance Pre-payment
Pre-payment Analysis

(We've broken it down for you!)

SummaryTotal AmountTenure
Without Pre-payment Rupee 47,87,42610 yrs
With Pre-payment Rupee 45,33,7238years 4months
YOU SAVE Sprite 0 YOUR TENURE REDUCED BY 1 years 8 months
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What is an EMI?

EMI stands for Equated Monthly Instalment which is a fixed amount of payment a borrower has to make to the lender at a specified date on monthly basis. EMIs consists of your principal loan amount and interest amount, payable every month.

Although the EMI remains fixed for every month, the amount paid towards principal and interest changes. The interest component constitutes a major portion of the EMI payment in the initial stages. However, as the loan period progresses and the principal outstanding reduces, the portion of interest repayment decreases. This happens until the end of the loan period when the entire loan amount has been paid off.

How EMI Calculators Work?

To put it quite simply, an EMI calculator is a tool that will require you to enter the amount you want to borrow, the duration of the loan, the interest rates and the processing fee and it will do the rest. The basic formula that works behind an EMI calculator is:

E = P x r x (1+r)^n/((1+r)^n – 1)


  • E is the amount that you will have to pay every month; basically the EMI.
  • P is the amount that you want to borrow.
  • r is the rate of interest that is applicable but calculated on a monthly basis instead of the annual rate of interest. It is obtained by using the formula r = (annual interest/12) x 100.
  • n is the duration of the loan in terms of months. So if you select a term of 5 years, n will be 60.

This is the most basic formula that will be used by the calculator but there are some that may even include things like the processing fee for the loan, into the calculation of the monthly instalment. The processing fee will generally be a certain percentage of the amount being borrowed and can range from 1% to 3% but since it is decided by the bank it can be different for each bank.

How to Use EMI Calculator?

Whether you obtain a secured loan (home loan or car loan) or an unsecured loan (personal loan), you have to repay the loan through Equated Monthly Installments (EMIs) over a specified period of time called the loan tenure. The cost of your loan is calculated in terms of monthly payments. Loan EMI calculation can help you find out the monthly cost of your loan. Accordingly, you can create a monthly budget to balance your income and expense.

To ensure your loan EMI payments are within your repayment capacity, you can either adjust the loan tenure or the loan amount, or both. You can’t adjust the loan interest rate and processing fee levied by a bank. However, you can compare various loan offers and choose one with a low interest rate and zero processing fee to lower the cost of your loan. Here are some important reasons why it is advisable to calculate your loan EMI beforehand:

  • Loan amount: Borrow only as much as you can repay. Depending on the loan EMI calculation, you can choose an appropriate loan amount to meet your financial needs. Maintain a low debt-to-income ratio so as to avoid defaulting on your loan.
  • Loan tenure: A short loan tenure means higher EMI payments and lower interest payment whereas a long loan tenure means lower EMI payments but higher interest payment. Calculate EMIs for different loan tenures using the online EMI calculator. Choose a suitable loan tenure so as to avoid a higher interest payment.
  • Loan EMI: A borrower with a high debt-to-income ratio has higher chances of defaulting on the loan. If you default on a secured loan like a car loan, the bank will repossess your car and put it up for auction in order to compensate for the outstanding dues. Which is why, your loan EMI payments must not exceed more than 50% of your income.
  • Manual loan EMI calculation can be cumbersome and prone to human error. With the advent of technology, it has become easier to calculate loan EMI online with just a few clicks of your mouse. Use the free online EMI calculator available on a reliable third-party website or a bank website to get instant and accurate results. Online EMI calculators can be used to calculate the cost of any type of loan scheme that you choose.

EMI Calculator provides following information

There are three parts to the information that the calculator provides. The first is the EMI itself, the second a breakup of the payments due and the third the amortisation table.


The EMI or the Equated Monthly Instalments are the amount that you can expect to pay if you go in for a loan. It includes payments of the principal and the interest that is applicable on the loan. It is the most important information that the calculator provides since the EMI is at the basis of the decision about the affordability of the loan.

The breakup

The breakup is a breakup of the entire amount that you will pay to the bank or the financial institution. It will tell you the amount that will be paid back as the principal and the amount that will be paid as the processing fee for the loan. It will also tell you how much of the repayment will be the interest on the loan.

How to use Online EMI Calculator
How to use Online EMI Calculator?

Amortisation tables

The amortisation table is a snapshot of the progression of the loan and tells you how much you will have paid back at the end of each year, as the loan progresses. It also helps you understand how the interest on the loan will be paid back. It also shows you how much of the initial EMIs will be the interest and how much will be the principal.

Loan Amortization Table

Most banks offer car loans up to 85% of the on-road price or ex-showroom price of the car. Tip to borrowers - make a higher down payment to lower the cost of your car loan. Let’s say the total price of your dream car is Rs.15 lakh and you have Rs.5 lakh to put as down payment, then a car loan of Rs.10 lakh can be used to pay the remainder of the cost.

To calculate the monthly cost of your car loan, use the free online EMI calculator. Enter the principal loan amount, loan tenure, interest rate and processing fee into the tool and click on the ‘calculate’ button. You will get instant and accurate results in the form an amortisation table, a pie-chart, and a colorful bar graph.

The amortisation table represents the periodic repayment schedule of your car loan. It consists of the monthly EMIs, interest payments, and the outstanding dues after each EMI payments.

Here is an example to better understand the amortisation table:

Car Loan Amount - Rs.10 lakh

Car Loan Tenure - 7 years

Car Loan Interest Rate - 12%

Processing Fee - 2%

Based in the EMI formula, E = P x r x (1+r)^n/((1+r)^n – 1), the overall breakup of the total amount payable is as follows:

Monthly Car Loan EMI - Rs.17,653

Total Interest Due - Rs.4,82,830

Processing Fee - Rs.20,000

Total Amount Payable - Rs.15,02,830

Your car loan repayment schedule in regular instalments over 7 years (2018 to 2024) is represented in the below-listed amortisation table:

Year Principal Paid Interest Paid Total Payment (Principal + Interest) Outstanding Loan Balance
2018 Rs.97,057 Rs.1,14,776 Rs.2,11,833 Rs.9,02,944
2019 Rs.1,09,365 Rs.1,02,467 Rs.2,11,832 Rs.7,93,579
2020 Rs.1,23,235 Rs.88,597 Rs.2,11,832 Rs.6,70,344
2021 Rs.1,38,865 Rs.72,969 Rs.2,11,834 Rs.5,31,480
2022 Rs.1,56,476 Rs.55,358 Rs.2,11,834 Rs.3,75,004
2023 Rs.1,76,322 Rs.35,514 Rs.2,11,836 Rs.1,98,683
2024 Rs.1,98,685 Rs.13,151 Rs.2,11,836 Rs.0

How to Use Bank Bazaar's EMI Calculator?

Using this calculator is very easy. All you need are the following loan details:

  • Loan amount - this is the amount you need to borrow
    Interest rate - the interest rate for the chosen loan scheme
  • Tenure - the loan period
  • Processing Fee (if any) - the amount charged by the lender to process the loan

(If you don’t have this information at hand, you can obtain it navigating to your chosen bank’s loan page under the section ‘Select a product to begin’, featured under the calculator).Once, you have these details, use the sliders to set the required parameters for the loan amount and tenure. Then, input the interest rate and processing fee in the relevant boxes.....and Voila!

The loan EMI calculator will instantly reveal your monthly EMI amount payable on the loan!

It will also provide a clear, graphic and tabular break-up of your loan repayments, using the EMI so calculated. In addition an amortization table is created which gives you a detailed overview of your repayment schedule. A cut above the rest, BankBazaar’s EMI Calculator delivers more than you expect.

EMI Calculator To Suit Your Loan

BankBazaar has customised its EMI Calculator to suit different loan schemes. To calculate your EMIs on your personal loan, navigate to the Personal Loan EMI Calculator provided under the sites ‘Financial Tools’ section. Similarly, you can calculate EMIs on your auto and home loans using BankBazaar’s Car Loan EMI Calculator and BankBazaar’s Home Loan EMI Calculator, respectively.

Effect of loan prepayment on your EMI payments

Should you find yourself flush with cash, you may decide to prepay your loan (i.e. pay an extra amount towards principal). If so, you can calculate your new EMIs by adjusting for the amount you wish to prepay. This will let you know how much interest you save by reducing the principal outstanding. (interest is calculated on the principal outstanding)

Factors that can impact your EMI amount

When you are planning to take a loan for your financial needs, you need to calculate the amount that you will have to pay through equated monthly installments (EMIs) in order to match with your repayment capability. For this, you will need to factor in the loan amount and rate of interest (ROI) along with the term of your loan. However, your equated monthly installments (EMIs) can be impacted for a number of reasons. Mentioned below are the scenarios when a loan EMI can change:

  • When the interest rate on the loan changes When you are checking your monthly amount, the EMI calculator usually calculates the EMI that you have to pay using a fixed interest rate. If your loan contains a fixed interest rate then your EMI will not be affected throughout the entire loan tenure. However, in case you have opted for a scheme with floating rate of interest, your applicable ROI is subject to change depending on the ongoing repo rate announced by the Reserve Bank of India (RBI). In such a scenario, the EMI for your loan can also get impacted - negatively or positively. If you don’t want a change in your EMI amount, you can ask the lender to adjust the term of the loan instead of the EMI.
  • When the loan is partially repaid Most of the banks and non-banking financing companies offer the customers the benefit of making a lump sum prepayment towards their loans. Once you make a prepayment for a loan, the principal amount goes down. This, in turn, can reduce the outstanding debt that you will have to repay. Therefore, the EMI of your loan can see a decline. While you might need to pay additional charges in order to avail this facility or can be eligible to make a prepayment only after a certain amount of time, depending on the lender, many financing organisations also offer their customers the benefit of zero prepayment fee. Make sure to check the terms and conditions that your lender has regarding the prepayment facility.
  • When you choose a flexible EMI scheme If you avail a loan with a flexible EMI scheme, you will have the benefit of paying a monthly installment amount that suits your income. In a step-up EMI plan, the EMI amounts gradually increase as the term of the loan progresses to stay in pace with your increasing salary. This scheme better suits individuals who are at the beginning of their careers. On the other hand, in case a person chooses a step-down EMI plan, the amount of the EMI that he or she has to pay will decrease with time. This scheme is helpful for people who are close to their retirements.
  • When the term of the loan changes If a person manages to get his or her loan tenure extended or reduced, the EMI payable towards the loan will also increase or decrease accordingly in order to adjust to the new loan tenure. If you opt for a long tenure, you will have to pay more money towards interest in the long run. However, a shorter term of the loan will translate to less amount to be paid as interest. Therefore, a change in loan tenure should be done only with a thorough understanding of the aftereffects.

Pick a suitable loan tenure to save up on interest payments

Pick the most affordable loan by comparing EMIs for different loan tenures. This can be done by altering the loan period in the calculator; keeping the loan amount and interest rate the same. By lengthening the loan period for a chosen loan scheme, the EMI amount can be reduced. Using the calculator, you can quickly compare EMIs for different tenures and choose the one that most suits your budget.

Calculate loan EMIs for fixed and floating interest rates

Understand loan repayment schedules by altering the interest rate, keeping loan amount and tenure the same. In case of fixed rate loans, interest rates remain constant over the loan tenure. In this case, EMIs also remain constant. This is usually the case with car loans and personal loans.However, in case of floating rate loans, interest rates can vary with movements in market rates. In this case, EMIs will change. This is particularly beneficial for home loans.Input the new interest rate in BankBazaar’s EMI Loan Calculator to compare EMIs before interest rate changes and after. A new amortization schedule is also generated to reflect changes in EMIs.

EMI Calculator for Flat Rate of Interest

A fixed rate of interest is one where the interest rate on a loan remains fixed throughout the loan repayment period (loan tenure). This type of interest rate is comparatively higher than a floating rate of interest. Fixed rate of interest is better for those who don't prefer the risk of fluctuation that is an integral part of a variable interest rate. In the case of a fixed rate of interest, the loan EMI remains the same throughout the loan tenure.

The online loan EMI calculator can be used to calculate loan EMIs with a fixed rate of interest. Depending on the results, the borrower can carefully plan his or her monthly budget in order to maintain a low debt-to-income ratio. All one has to do is enter the loan amount, loan tenure, and fixed rate of interest rate into the tool and click on the ‘calculate’ button to get instant and accurate results. If there is a processing fee charged by the bank, enter the processing fee into the too. If you want to prepay your loan before the end of its loan tenure, you can enter the prepayment amount into the tool to get a revised amortization schedule. Banks charge a prepayment penalty for loans with a fixed rate of interest.

EMI Calculator for Floating Interest Rate

Floating rate of interest changes depending on the market-lending rate. It is also known as variable rate of interest. If the lending rate increases, the floating interest rate will also increase. Due to the risk of fluctuation, the floating rate of interest is usually lower than the fixed rate of interest. With a floating rate of interest for a specified loan tenure, you can either expect your EMI to reduce or increase depending on the rise in the interest rate.

When there is an increase in the floating rate of interest on your home loan, the bank will give you the option to either increase your EMI and keep the same loan tenure or to keep your EMI the same and increase the loan tenure. If your loan tenure reaches the upper limit, then the bank will give you the option to prepay a part of your loan. Using a home loan EMI calculator for various combinations of loan tenure and interest rates can help you make a smart decision with regards to loan repayment. Some banks may waive off the prepayment penalty fee for loans with a floating rate of interest.

Types of EMI calculator

Home loan EMI calculator

The home loan EMI calculator comes packed with features that can range from the obvious to the not so obvious. It, obviously, shows the exact EMI that will be payable every month for a specific amount borrowed and a specific tenure. The feature that are not so obvious is the fact that this calculator can also provide the facility to include planned pre-payments towards the home loan. This means that when the calculator shows you the instalments payable, it has already accounted for prepayments and has also included them when showing the breakup of the expenses. The detailed break up will include the amount borrowed, the interest payable, the amount you will pay through prepayment, the processing fee and the fee for prepayment.

Car loan EMI Calculator

The car loan calculator is a tool that can be used to calculate the exact amount that you will have to pay on a monthly basis when you decide to take a car loan. This calculator too will collect information related to the amount you wish to borrow, the interest rates, the processing fee and the tenure of the loan and provide you with the amount that you will pay every month. Down payments for the vehicle don’t have to be considered when using this calculator and it too comes with the breakup of the expenses and the amortisation table.

Personal loan EMI calculator

The personal loan EMI calculator is the ideal tool for deciding how much you can afford to pay back since it is specific to personal loans. It too collects details of how much you wish to borrow, the duration, interest rates and the processing fee for the loan. It can also be customised to take into account any prepayments that you intend to make before telling you the EMI that you will have to pay.

Business Loan EMI Calculator

Business loans like any other type of loans are repaid through equated monthly installments over a specified period of time. Here again, carrying out manual EMI calculation can be time-consuming and prone to human errors. Therefore, it is advisable to use an online business loan EMI calculator that is available on the bank website or a reliable third-party website. The tool can be used any number of times for free. It is not only simple and easy to use but also instant and accurate in terms of results. One major advantage of using a business loan EMI calculator is the flexibility to try out different combinations of loan tenure, loan amount, and interest rate in order to save money on interest payments. Business Loan EMI is calculated using the below formula:

E = P*r* (1+r)^n/([(1+r)^n]-1), where E is the equated monthly installment, P is the principal loan amount, r is the interest rate, and n is the loan tenure.

Enter the business loan amount, interest rate, and loan tenure into the tool and click on the ‘Calculate’ button. You will get an amortization table which represents your periodic loan repayment schedule. The table will consist of the EMIs, outstanding dues after each EMI payment, and interest payment. Using the business loan EMI calculator, you can pick a suitable loan tenure and a loan amount within your repayment capacity. Sometimes, borrowers choose to prepay a part of the loan amount before the end of the tenure in order to reduce the repayment period or the interest payment. The EMI calculator can also be used to get a revised loan repayment schedule that includes business loan prepayment.

Simple Interest Loan EMI Calculator

A simple interest loan EMI calculator can help you calculate the simple interest on a given loan amount for a specified loan tenure at the applied rate of interest. The tool is simple and easy to use. All you have to do is input the borrowed amount, the simple interest rate, and the loan tenure into the tool. Click on the ‘calculate’ button to get instant and accurate results. For example, if you borrow a loan of Rs.3 lakh for 3 years at a simple interest rate of 3% p.a., you have to pay a simple interest of Rs.27,000 which is Rs.750 per month.

EMI Calculator in Excel

Apart from the online calculators, EMI calculators can also be configured in an Excel sheet. To do this you will need to know the formula that makes an EMI calculator works and also how to use formulae in excel sheets. The one disadvantage of the excel sheet calculator is that you need to know how to configure it and also need to input the interest rate after calculating the monthly rates. It also does not take into account the processing fee. By contrast, the online EMI calculator can take the interest rates as annual rates and convert them to monthly rates on its own. It can also include the processing fee and other smaller features like prepayments.

How to calculate your EMI using Excel

Calculating the EMI for your loan is crucial to determine whether it matches your repayment capability or not. Applying for a loan that exceeds your ability to repay the debt can lead to the rejection of your application. If you apply for a loan wherein the EMI is equal to your maximum repayment ability, your chances of defaulting severely increases. In case you are not able to check your EMI using an online EMI calculator, you can also do the same using an Excel spreadsheet. All you need to do is use the PMT function to calculate your monthly installments. The syntax for the excel function is:

PMT (rate, nper, pv)


pv = The principal amount or the present value

rate = The fixed rate of interest at which the loan is borrowed

nper = The number of payments to be made to repay the entire debt

How Are EMIs Calculated?

The mathematical formula for calculating EMI = [P x R x (1+R) ^n] / [(1+R)^ n-1]. (P is the principal loan amount, R rate of interest per month and N is the the number of monthly instalments). Manual calculations are too complicated to perform accurately, which is why many borrowers are left confused after availing a loan. Understanding this pain-point led BankBazaar to develop one of the easiest and most user-friendly online Loan EMI Calculators.

Q. Are the calculators for home, car and personal loans the same?

A. In most cases they can be the same since all three loans work off the same basic set of information like amount borrowed, prepayments, tenure, interest rates and processing fee however with some calculators there could be a restriction placed on the amount to borrow based on the type of loan.

Q. Are calculators more accurate than excel sheets?

A. The only difference between the two is that with a calculator, it is a ready to use tool whereas with an excel sheet, you may have to program the calculator before you start using it. Such programing can be a little tedious and complicated, especially if you are not very comfortable with the software which makes the calculator the preferred choice.

Q. Will banks provide the calculator?

A. Yes. These days most, if not all, banks have calculators, specific to various loans, available on their websites.

Q. Why should I use an EMI calculator?

A. The simplest answer is that it’s fast and it’s convenient. This means that you can do multiple calculations in minutes where such calculations many take longer were you to sit down with a pen and paper. These calculators are also super accurate so it eliminates the possibility of errors in calculations, provided you provide accurate data.

Q. Is the EMI shown by the calculator the same as that which the bank will ask me to pay?

A. When it comes to the EMI, assuming that the bank will approve the amount and tenure, the exact EMI that you will have to pay may differ slightly since there is a chance that things like the interest rates and the processing fee may be a bit different from what you used while calculating the EMI.

Q. What happens if I fail to make an EMI payment?

The bank will charge a penalty fee if a borrower misses an EMI payment. A missed or delayed EMI payment will reflect on your credit report. Not making loan EMI payments on time can have a negative effect on your credit score.

Q. I have taken a personal loan of Rs.5 lakh for 5 years at 12.50% interest rate. What will be my monthly EMI?

Enter the loan amount, loan tenure, and interest rate into the personal loan EMI calculator and click on ‘Calculate’. The result is as follows - your monthly loan EMI is Rs.11,249. The total cost of your personal loan is Rs.6,74,938 where Rs.5 lakh is the principal loan amount and the total interest payment is Rs.1,74,938.

Q. Is my loan EMI fixed or can it change over the loan tenure?

In the case of a business loan and home loan, banks offer floating rate of interest. Therefore, your loan EMI may change with the change in interest rate. Some banks allow you keep the EMI constant while increasing the loan tenure. Loan prepayment can also change your EMI. Banks will give you the option to either keep the EMI constant and decrease the loan tenure or reduce the EMI and keep the loan tenure the same.

Q. Why is it important to carry out loan EMI calculations beforehand?

Calculating the EMI before applying for a loan will help you choose a suitable loan amount and loan tenure. Based on the EMI calculation, you can adjust the loan amount and loan tenure to keep the total cost of your loan within your repayment capacity. You can also decide whether you want to prepay the loan without risking a higher interest payment.

Q. Is it good to pre-close a loan before the end of its tenure?

Pre-closing your loan before the end of its tenure can have a negative effect on your credit score. Making timely EMI payments can help you improve your credit score. Therefore, opt to prepay a part of your loan (not the whole loan) and reduce the loan tenure to save up on interest payments. Banks charge a penalty fee for prepayment.

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Further Reading about EMI Calculator

Top picks from our Financial Expert

News About EMI Calculator

  • Fixed deposit interest rates to be raised by ICICI Bank

    ICICI Bank has increased the interest rates on certain Fixed Deposit plans. The changes in the interest plan have been incorporated by the bank since August 14,2018. The interest rates were raised ranging between 15 basis points and 25 basis points on some term deposits. An additional 1 percent interest will be given to the ICICI Bank staff on domestic Fixed Deposits under Rs.1 crore. The updated rates are applicable for both general and senior citizens. The move from ICICI Bank comes after some of the leading banks in the country like State Bank of India, HDFC and Canara Bank decided to hike the interest rates on specific fixed deposits after the hike announced by the Reserve Bank of India earlier this month. The Reserve Bank of India in the third bi-monthly statement announced a hike in the repo rate by 25 basis points. The FD rates were raised by the Reserve Bank of India two days before the announcement of the hike by the Reserve Bank of India. The interest rates on domestic term deposits was increased by 5 - 10 basis points by the Reserve Bank of India. The deposit rates for up to one year has remained unchanged while the deposit for durations of more than 1 year but less than 2 years has been raised by 5 basis points to 6.70 percent.

    17 August 2018

  • Vijaya Bank makes changes to the MCLR

    Vijaya Bank has made changes to their marginal cost of funds based lending rates. The changes in the marginal cost of funds based lending rates has started to be in effect from 10 August 2018. The overnight MCLR has increased from 7.90 to 8.00 percent. The one month MCLR has increased from 8.00% to 8.10%. The three month MCLR has increased from 8.25% to 8.30%. The six month MCLR has been changed from 8.50% to 8.55%. One year MCLR has increased from 8.55% to 8.65%. The two year and three MCLRs has remained the same at 9.00% and 9.25% respectively.

    14 August 2018

  • Dhanlaxmi Bank, Bank of Maharashtra and Syndicate Bank to maintain the MCLR for one year

    Dhanlaxmi Bank, Bank of Maharashtra and Syndicate Bank have decided to not increase the Marginal Cost of fund-based Lending Rate for one year. The marginal cost of fund-based lending rate (MCLR) for one year was maintained by Bank of Maharashtra at 8.75% and the six months marginal cost of fund-based lending rate remained at 8.40%. Dhanlaxmi Bank set the six months to one year MCLR at 9.70% while the three to six months MCLR was set at 9.25%. Six month MCLR was maintained at 8.40% by Syndicate Bank while the one year MCLR was maintained at 8.65%. HDFC had previously increased lending rates by 20 bps. Lending rate changes come after the Reserve Bank India decided to hike the short term lending rate by 25 basis points, raising the rate to 6.50 percent. This change was done in the third bi-monthly monetary policy statement for 2018-19.

    10 August 2018

  • Deposit rates on retail loans to increase faster than interest rates

    Many of the banks have increased the returns on fixed deposits and will continue to rise even more. This is because the fixed deposit growth at 5 percent in FY18 amounts to less than half the growth when it comes to loans. The State Bank of India recently raised the deposit rates last week. HDFC Bank, the second largest private lender in the country has now done the same by increasing by up to 60 basis points. It is expected that the banks will increase the interest rates further looking at the shrinking liquidity and the growth in credit demand. The hike from HDFC Bank comes days after the Reserve Bank of India increased the policy rates by 25 basis points during the policy review meeting held on August 1. Axis Bank, Dena Bank and Punjab National Bank have also increased the rates this month. In a rising rate regime, the growth of lending rates has been considerably higher than the interest rates on deposits. However, the transmission of deposit rates has been higher than the transmission of lending rates in the last two hikes. This is partly due to the change in interest regime that has happened in the recent months. The RBI governor has said that the liquidity might go out of the banking system due to the increase in the currency that is in circulation as the festive season comes closer and the number of withdrawals increases.

    9 August 2018

  • RBI hikes repo rate, projects inflation at 4.8% for the second half of FY19

    The monetary policy committee (MPC) recently increased the benchmark of the repo rate by 25 basis points. This is the second time the repo rate has been increased in two months. The repo rate currently stands at 6.5 percent. The hike in the repo rate is due to the inflation rate which has now increased to 5 percent. It is also because of an increase in the core inflation, which now stands at 6.35 percent. The inflation forecast made by the RBI has also increased marginally, raising from 4.8 percent to 5 percent. The Reserve Bank of India is expecting that the recent hikes will have a significant impact on the inflation even though food inflation has slowed down lately. Even though the prices of crude oil have moderated to some extent, they continue to remain at a high price. An increase in the household inflation expectations could be a major factor that could influence inflation outcomes in the next few months. Industrial output surveys taken up by the Reserve Bank of India have also suggested a change in the manufacturing activity. The GDP growth projection has been retained though, with the projection at 7.4 percent for 2018-19. The GDP growth is projected to be at 7.5 percent for the first quarter of FY20.

    7 August 2018

  • Banks Increase Lending Rates Post Hike In RBI Rates

    After Reserve Bank of India (RBI) increased the rates for the second time in two months, banks like Kotak Mahindra, HDFC Bank, Union Bank of India, and Karnataka Bank too have announced an increase in the lending rates. The RBI has increased the short-term lending rate by 25 basis points to 6.50 percent in its third bi-monthly monetary policy statement for 2018-19. Following the same, HDFC has increased its retail prime lending rate (RPLR) by 20 basis points. Kotak Mahindra Bank, Union Bank of India, and Karnataka bank also have announced an increase in marginal cost of lending rates (MCLR) by 5-10 basis points.

    6 August 2018

  • RBI has again hiked the repo rate of lending

    The repo rate has been again hiked by the Reserve Bank of India this Wednesday, 1 August 2018. The rate has been raised from 6.25% to 6.50% with an increase of 25 bps. This decision was taken by the six-member monetary policy of RBI during the third bi-monthly monetary policy review for 2018-19. This is the second time that RBI increased the rate in past 2 months. Previously, RBI hiked the rate in its second bi-monthly monetary policy statement for 2018-19 by 25 bps making it 6.25% from 6.00%. As evident, this decision is taken by the central bank due to the increasing inflation condition in the Indian economy. Along with this, the reverse repo rate and the MSF Rate are also increased. This time the decision of repo rate hike is not a unanimous one like the last time as 5 out of 6 members voted for the hike.

    3 August 2018

  • RBI’s recent repo rate hike is likely to make home loans

    The Reserve Bank of India has raised the repo rate on 1 August 2018 by 0.25% or 25 bps which means the rates of the home loans will continue to be high. This hike was declared by RBI on Wednesday while announcing its third bi-monthly monetary policy review statement. The last repo rate hike was announced two month’s back on 6 June 2018 by 0.25% in the second bi-monthly monetary policy statement for 2018-19. At that time the rate was raised from 6.00% to 6.25%. RBI has taken this step to bring a balance in the economy by reducing inflation. Due to this recent hike, the MSF Rate is also increased from 6.50% to 6.75%.

    2 August 2018

  • Deposit rates raised by SBI again

    The State Bank of India has raised the deposit rates by 5 to 10 basis points on select maturities. The move comes two days before the monetary policy of the Reserve Bank of India that may increase the repo rate by 25 basis points. The new revised rates will be effective immediately. Interest rates have been raised for deposits up to Rs.1 crore that have maturities of more than one year. Interest rates for deposits of one year to less than two years will now have an interest rate of 6.70 percent, increasing from the 6.65 percent that was in place earlier. Rates on deposits between two years but less than three years has increased from 6.65 percent to 6.75 percent. Between three years and less than five years the interest rate has increased to 6.80 percent from the 6.70 percent earlier. For more than five years and up to ten years, the interest rate has increased from 6.75 percent to 6.85 percent. State Bank of India had previously raised their deposit rates in the month of March. The term deposit rates were varied between 10 to 25 basis points on the different tenures. The move comes at an interesting time as many are still speculating if the RBI will choose have another repo rate hike in the third bi-monthly policy that is set to announced in August 1. Many expect that the rates will not be hiked for a second time in such a short duration but if there is an increase, banks will most likely raise the marginal cost of funds-based lending rate (MCLR).

    1 August 2018

  • RBI may increase the interest rates again due to rising inflation

    It is expected that the Reserve Bank of India will raise the interest rates for a second time consecutively in their policy meeting. This is due to the fact that the central bank has to take to stem the capital outflows. This is also because the inflation is now well above the medium term target set by the central bank which was at 4 percent. This is only set to get worse as the currency continues to slide while the oil prices still remain expensive. It is expected by a number of economists and bond investors that the Reserve Bank of India will increase by 25 basis points. This will increase the repurchase rate to 6.5% starting August 1. A change in the rate will push the benchmark up to a two year high. The yield on benchmark 10-year bonds has increased more than the 8 percent for the first time in three years due to the increase by 45 basis points. Due to the expectation of further policy tightening, short-term yields have increased much more in comparison.

    31 July 2018

  • Lower net interest margins and higher slippages affect YES Bank performance

    Investors have not been much impressed with the growth in earnings and loans of YES Bank in the June quarter. The stock was down by almost 4 percent after the results. This is not without reason though. While the bank managed to continue its great run on the lending front, some of the sheen has been taken away by the drop in the net interest margin (NIM). The NIM currently stands at 3.3 percent and is way behind the 4 percent target set by the management. The increase in the gross slippages has not gone down well with the investors. On the back of market-to-market losses on bonds, the banks provisions increased substantially. YES Bank however boasts a 53% growth in advances despite the lack of proper growth within the industry. The bank has continued to maintain its position as a predominantly corporate lender, with that contributing to more than than 67% of the portfolio. The growth in the segment has been recorded as 52% in the June quarter. The active financing of assets and the increase in refinancing opportunities under the IBC process has resulted in the growth of the bank within the corporate space. YES Banks net income grew by just 22.7 percent, much lower than the growth within the segment in the June quarter. The NIM of YES Bank has been on a steady decrease since the past three quarters. The NIM has reduced from the 3.7 percent recorded in September 2017 to 3.3 percent now. YES Bank has also increased their MCLR by close to 50 bps and the benefits will experienced in the next few quarters.

    30 July 2018

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