Recovery of Retail Loans

How it Works: The entire principal + accumulated interest is repaid at the end of the period (one shot). Computed using compound interest — Final Amount = P × (1 + r)^n; Where Used: Short-tenor business loans, agri (crop) loans, bridge loans

How it Works: Principal is divided into equal monthly installments; the borrower additionally pays all interest accrued for that month; Where Used: DPN-style demand loans, project loans with moratorium-plus-amortisation, Govt. dues

How it Works: Borrower pays the same fixed amount every month — each EMI bundles principal + interest. Early EMIs are interest-heavy; later EMIs are principal-heavy; Where Used: Housing, auto, personal, education, gold, consumer durable loans — the dominant retail repayment mode

is sanctioned at **9% p.

Definition: Default occurs due to reasons beyond the borrower's control; Examples: Job loss, medical emergency, salary delay; business setback from new competition, sudden regulatory change, fire/flood

Definition: RBI defines wilful defaulting as deliberate non-payment of dues by a borrower despite adequate cash flow and good net worth; Examples: Asset bought with bank's money sold off without bank's knowledge; loan amount siphoned for non-sanctioned purposes; borrower simply won't pay though can…

Utilisation of funds for a purpose for which the loan was not sanctioned — e.g., short-term WC used for long-term assets; deploying borrowed funds for activities other than those sanctioned; transferring funds to subsidiaries/group companies; routing funds through any bank other than the lender…

Funds borrowed from banks are utilised for purposes unrelated to the operations of the borrower, to the detriment of the financial health of the entity or of the lender