__Retail Banking__

**CAIIB-RETAIL BANKING-LAST MINUTE REVISION-CASE STUDY : 1**EMI= P x r x (1 + r)^n / ((1+r)^n -1)

Here p = principal amount (loan taken)

r = interest rate per month (ex: if interest rate per annum is 10% then 10/(12*100))

n= tenure in months

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EMI examples,

If the Loan taken = 1,00,000 at the rate of 12% interest for the period of 2 Years. Then, EMI will be,

p = Loan taken = 1,00,000

r = interest rate per month = 1% = 0.01

n= tenure in months = 2 Years = 24 months

EMI = 100000*0.01*(1+0.01)^24 /((1+0.01)^24 -1)

= Rs. 4707

If the Loan taken Rs 1 Lakh at 11 percent per annum, repayable in 15 years, the EMI will be :

Here, p = Loan taken = 1,00,000

r = interest rate per month = 0.11/12 = 0.00916

n = tenure in months = 15 Years = 180 months

EMI = (100000 x .00916) x ((1+.00916)^180 ) / ([(1+.00916)^180] – 1)

= 916 X (5.161846 / 4.161846)

= Rs. 1,136

Calculate the EMI for a loan of Rs. 10,00,000 @ interest rate of 9 per cent p.a. for 15 years.

p = Loan taken = Rs. 10,00,000

r = interest rate per month = 0.09/12 = 0.0075

n = tenure in months = 15 years = 180 months

EMI = ((10,00,000 x 0.0075) x (10.0075)^180) / ([(1+0.0075)^180]-1 )

= Rs. 10,142.67

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