Equated Monthly Instalment

Equated Monthly Instalment

The most commonly adopted method of repayment of loan now is EMI, where the principal and interest is repaid through equal monthly instalment over the fixed tenure of the loan. It is fixed on the basis of the loan amount, interest rate and the tenure of loan.

accounts where nominal interest is paid. Normally, business firms/companies open current accounts which facilitate larger number of transactions. In the case of individuals, and where commercial transactions are not involved, savings accounts are opened. In both these cases, the amount deposited is repayable back to the customer as and when needed. Current account and savings account are’a Iso known as demand deposits and customers can withdraw the funds by issuing cheques. Individuals can also draw cash in the AIMs.The accounts, where the savers can keep their funds for a longer time are called term deposits. Within term deposits, there could be variations, depending upon the need of the customer, like fixed deposits, recurring deposits, monthly income deposits, cumulative deposits etc. Unlike current and savings bank deposits, wherein the amount deposited with the banks are repayable an demand, in the case of term deposits, the amounts deposited are, normally, repayable only after the expiry of the agreed term/ period for which it is kept. There are, however, provisions for closing the account prematurely and withdrawing the amount, subject to certain penal interest stipulations. Term deposits constitute the largest portion of a bank’s funds, apart from its own capital.