What is an amortisation schedule? (Repayment schedule)

An amortisation schedule lists every instalment of a loan, split into interest and principal, until the balance is zero.

Written 09 September 2026. For bankers in India.

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In one line

An amortisation schedule lists every instalment of a loan. Each row splits the instalment into interest and principal.

Why it matters to you

• It proves the EMI (Equated Monthly Instalment) is correct. Check one row by hand and you can trust the rest.
• It shows the real cost. Total interest over the term often exceeds the loan amount on a long-term loan.
• It must reach zero. A schedule that never falls to zero hides a growing balance, and that is a fault.
• RBI asks for it in writing. The key facts statement must carry it for many retail and small business loans.
• A part-payment breaks the old schedule. You must know which two ways a bank can rebuild it.

How it works

The schedule is built one row at a time, from the loan amount, the rate and the EMI.

1. Start with the loan amount as the opening balance for row one.
2. Charge interest for that period on the opening balance.
3. The instalment pays that interest first. What is left reduces the balance.
4. The reduced balance becomes the opening balance for the next row.
5. Repeat until the balance reaches zero on the last row.

The columns, in RBI's own worked example. Instalment number. Outstanding principal. Principal. Interest. Instalment. Some banks add a due date column as well.

Opening balance is the amount owed at the start of a period, before that period's instalment is paid. Closing balance is what remains after it.

Why interest falls and principal rises. Interest is charged only on the balance still owed. As the balance falls, the interest part of each instalment falls too. Since the instalment stays the same, more of it then goes to principal.

Worked examples

Every figure below was computed by machine on 9 September 2026. The rates are only for teaching.

Example 1: RBI's own worked example, checked by machine

• RBI's key facts statement circular gives this example: loan Rs 20,000, rate 15 per cent a year, term 24 months.
• Our own computation gives an instalment of Rs 969.73, which rounds to RBI's own Rs 970.
• Row 1: interest Rs 250, principal Rs 720, balance after the row Rs 19,280.
• Row 2: interest Rs 241, principal Rs 729, balance after the row Rs 18,552.
• Row 24, the last row: interest Rs 12, principal Rs 958, balance after the row Rs 0.
• Total interest over the term is Rs 3,274, which matches RBI's own figure.
• This match is the check: if your system's schedule does not match a hand computation, ask why before you sanction.

Example 2: a home loan of Rs 25,00,000

• Loan Rs 25,00,000. Rate 9 per cent a year. Term 15 years, which is 180 months.
• The instalment works out to Rs 25,357.
• Row 1: interest Rs 18,750, principal Rs 6,607, balance after the row Rs 24,93,393.
• Row 90, the halfway row: interest Rs 12,510, principal Rs 12,847, balance Rs 16,55,146.
• Row 180, the last row: interest Rs 189, principal Rs 25,168, balance Rs 0.
• Total interest over the term is Rs 20,64,200. Total paid is Rs 45,64,200.
• This assumes the rate never moves and nothing is prepaid. Few loans run that way.

Example 3: a part-payment, and the reproducible number test

• Take the loan in example 2. After 60 instalments, using the exact instalment of Rs 25,356.66, the balance is Rs 20,01,698.
• A bank that instead uses the rounded instalment of Rs 25,357 reaches Rs 20,01,673, which is Rs 25 less.
• Both are right. Say which instalment figure you used, and a checker will get your number.
• The borrower now pays Rs 2,00,000 extra. The balance falls to Rs 18,01,698.
• There are 120 instalments left before the part-payment. Two honest ways to rebuild the schedule follow.
• Option A, same instalment: only 102 more instalments are needed, a cut of 18 instalments.
• Option B, same 120 instalments left: the instalment falls to Rs 22,823, a fall of Rs 2,534.
• Put both numbers in front of the borrower. RBI does not fix which one your bank must offer.

What the rule says

RBI RULE. The key facts statement must carry an amortisation schedule for the whole loan term.

• Paragraph 6 of the key facts statement circular of 15 April 2024 states this plainly.
• It covers commercial banks other than payments banks, co-operative banks, and non-banking financial companies.
• Housing finance companies are named among the non-banking financial companies covered.
• Paragraph 11 applies it to new retail and small business term loans sanctioned from 1 October 2024.
• RBI's own Annex C is an illustrative schedule with five columns, shown in example 1 above.
• Annex B, alongside it, is an illustrative sheet for the annual percentage rate on the same loan.
• The Responsible Business Conduct Directions, 2025 carry the same key facts statement duty.
• Its Annex XIII is the template. We could not read the words amortisation schedule in the extract we opened.
• We also could not read a repeal list for the 2025 Directions.
• So the article treats both papers as live, and asks the founder to help settle the point.
• We read the Fair Practices Code Master Circular in full for any older rule.
• It sets out loan applications, sanction letter terms, and rate change notices.
• It does not ask for a repayment or amortisation schedule anywhere in its text.

BANK PRACTICE. Whether the schedule shows a due date, and how a part-payment is rebuilt, are your bank's own choices.

BANKPULSE VIEW. Until the Annex XIII text is read in full, treat the 2024 circular as the clear source for this duty.

Common mistakes

• Trusting the EMI without checking row one. Work out interest on the opening balance by hand and compare it.
• Forgetting that a rounded instalment shifts every later balance. Say which instalment figure your check used.
• Assuming the balance always falls smoothly to zero. A schedule that grows the balance is a fault, not a feature.
• Not telling the borrower both part-payment options. A shorter term and a lower instalment are both honest choices.
• Reading a schedule from a website instead of your bank's own system. Sanction only on your system's figures.
• Ignoring the due date column. Some banks add it; RBI's own Annex C does not carry one at all.

How to use it at your desk

1. Pull up the schedule from your bank's own system, never from a website.
2. Check row one by hand: opening balance times the monthly rate gives that row's interest.
3. Subtract that interest from the instalment. The rest is that row's principal.
4. Confirm the last row brings the balance to exactly zero.
5. If a part-payment is proposed, ask the borrower which of the two rebuild options he wants.
6. Give the borrower the schedule in writing, as the key facts statement requires.
7. Say which instalment figure, rounded or exact, your system used to build the schedule.

Related terms

• EMI — the schedule is built row by row from the EMI (Equated Monthly Instalment) formula.
• Reducing balance rate and flat rate — a reducing balance schedule falls to zero; a flat rate loan works differently.
• Step-up EMI — its schedule has rows where the instalment itself changes, not only the split.
• Moratorium and pre-EMI — its schedule carries interest-only rows before the full EMI rows begin.
• Bullet payment — a bullet loan has no row-by-row schedule; the whole principal sits in one final row.
• Housing loan rules — the BankPulse page for home loans, where the longest schedules are seen.
• Personal loan rules — the BankPulse page for personal loans, where shorter schedules are common.

Quick check

On RBI's own worked example, what does row 1 show?

Answer: Interest Rs 250 and principal Rs 720, from an instalment of about Rs 970.

Does RBI fix which columns a bank's schedule must show?

Answer: RBI's own Annex C uses five columns. Adding a due date column is a bank's own choice.

After a part-payment, what must a schedule never do?

Answer: It must never leave the balance growing. It must still fall to zero by the last row.

Sources

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