The formula
EMI = [P × r × (1 + r)n] ÷ [(1 + r)n − 1]
- P — the principal, the amount actually borrowed.
- r — the monthly interest rate: annual rate ÷ 12 ÷ 100. At 9% a year, r is 0.0075.
- n — the tenure in months. Twenty years is 240.
A worked example
₹10,00,000 at 9% for 15 years. r = 0.0075, n = 180, and (1.0075)180 ≈ 3.8380.
EMI = (10,00,000 × 0.0075 × 3.8380) ÷ (3.8380 − 1) = 28,785 ÷ 2.8380 ≈ ₹10,143.
Over 180 months that is about ₹18.26 lakh repaid, of which roughly ₹8.26 lakh is interest — close to the amount originally borrowed.
Why the interest share falls every month
Interest is charged on the balance, not the original amount. In month one, 0.75% of ₹10 lakh is ₹7,500, so only ₹2,643 of the EMI reduces the principal. In month two, interest is charged on ₹9,97,357, so slightly more goes to principal. By the last year almost the whole EMI is principal.
The same thing in a spreadsheet
=PMT(9%/12, 180, -1000000) returns 10,142.68. To see the split for any month, use =IPMT() for interest and =PPMT() for principal.
Check it yourself
Any of the calculators on this site uses exactly this formula, so the numbers will match your bank's schedule to the rupee. If a lender's figure is materially different, ask whether they are computing on a daily reducing balance or adding fees into the principal.