How to Calculate Byaj (Interest) at “₹ per 100 per Month” — With Examples
A simple guide to calculating interest the traditional Indian way — rate per ₹100 per month, counting days, yearly compounding and part payments — with worked examples.
Two shops lend the same amount at the same rate for the same dates — and still arrive at different interest. The reason is almost always the day-count method. There are two in common use.
Method 1: Calendar days
Every month is charged for its real number of days — 31 for January, 28 or 29 for February, 30 for April and so on. The total duration is the actual number of days between the dates, counting both ends.
Method 2: 30-day month (360-day year)
Every month is treated as exactly 30 days, so a year is 360 days. The 31st of a month is treated as the 30th. The duration is usually spoken as “4 months 29 days” rather than a number of days.
The formula for the day count is:
Days = (Y₂ − Y₁) × 360 + (M₂ − M₁) × 30 + (D₂ − D₁) + 1
(with day 31 treated as 30)
Same loan, two answers
₹1,00,000 at ₹2 per 100 per month, given on 11 May 2026 and returned on 9 October 2026.
| Method | Duration | Interest |
|---|---|---|
| Calendar days | 152 days | ₹10,133 |
| 30-day month | 4 months 29 days (149 days) | ₹9,933 |
The calendar method is ₹200 higher because May, July and August each have 31 days.
Now a February loan: 1 February 2026 to 31 March 2026. Calendar days give 59 days (28 + 31). The 30-day method gives 60 days. Here the 30-day method is higher, because February is counted as 30 days.
Which one should you use?
- Use calendar days if you want the most precise, defensible figure, or if your customers compare with bank statements.
- Use the 30-day month if that is how your business — or your father’s bahi — has always done it. Consistency matters more than which method you pick.
- Never mix them. Choose one, write it on your slip or agreement, and use it for every loan.
The 29 February problem
With yearly compounding, the interest is added to the principal on each anniversary of the loan. A loan given on 29 February has no anniversary in a normal year. A sensible rule — and the one Sahayo software uses — is to roll it over on 28 February.
Let software remember the rule
Both Loan Calculator and Vyapari Khatabook support both methods. You choose once in settings; every loan after that follows the same rule, and the two products always give the same answer for the same loan.