__Retail Banking__

**CAIIB-RETAIL BANKING-LAST MINUTE REVISION-CASE STUDY : 2**The formula to calculate the periodic payments, as available in the website of NHB, is as under:

Installment Amount = (PV*LTVR*I)/ ((1+I)n-1)

Where, PV = Property Value;

LTVR = LTV Ratio;

n = No. of Installment Payments;

I = the value of I will depend on Disbursement Frequency selected. Example Value of the property - Rs. 50,00,000

Loan Amount - 90%

Loan Tenor - 15 years

Rate of interest - 10.50% Monthly installment - Rs. 10,368

Quarterly installment - Rs. 31,638

Yearly installment - Rs. 1,36,116

Loan Amount - 80%

Loan Tenor - 15 years

Rate of interest - 10%

Calculate Monthly Installment

Here, PV = 5000000

LTVR = 80/100 = 0.8

n = 15 * 12 = 180

I = 10/(12*100) = 10/1200 = 0.008333 =(5000000*0.8*0.008333)/((1+0.008333)^180-1)

= Rs. 9651 So, the Monthly installment = Rs. 9651

Loan Amount - 80%

Loan Tenor - 15 years

Rate of interest - 10%

Calculate Quarterly installment

Here, PV = 5000000

LTVR = 80/100 = 0.8

n = 15 * 4 = 60

I = 10/(4*100) = 10/400 = 0.025 = (5000000*0.8*0.025)/((1+0.025)^60-1)

= Rs. 9651

So, the Quarterly installment = Rs. 29,414

Loan Amount - 80%

Loan Tenor - 15 years

Rate of interest - 10%

Calculate Annual Installment

Here, PV = 5000000

LTVR = 80/100 = 0.8

n = 15 = 180

I = 10/100) = 0.1 = (5000000*0.8*0.1)/((1+0.1)^15-1)

= Rs. 125895

So, the Annual installment = Rs. 1,25,895

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