Financial glossary
EMI
EMI, or equated monthly instalment, is a scheduled monthly loan payment containing principal and interest.
What EMI means
An equated monthly instalment is the amount scheduled for payment each month over a loan tenure. For a reducing-balance loan, the payment may remain level while the principal and interest portions change.
How EMI relates to a calculation
EMI depends mainly on the amount borrowed, the periodic interest rate, and the number of repayments. A higher principal or rate generally increases EMI; a longer tenure can lower EMI while increasing total interest.
Simple example
A ₹5,00,000 loan repaid over five years has 60 monthly instalments. The EMI calculation applies the monthly rate to the outstanding balance across those instalments.