This use case showcases how Robotic Process Automation (RPA) can automate the calculation of the Effective Interest Rate (EIR) under Ind AS 109.

It demonstrates generating accurate amortisation schedules for loans and bonds without manual intervention.

The solution reduces errors, saves time, and ensures compliance in financial reporting for banks and corporates.

1.Problem Statement

A company borrows ₹43,00,000 and pays ₹38,239 as processing fees, so net cash received is lower than face value; relying on the brochure’s 16% nominal rate misstates the true financing cost and carrying amounts.

Under Ind AS 109 (amortised cost), the correct method is to compute the Effective Interest Rate (EIR) on the net proceeds and generate an amortization schedule that spreads interest and fees over the term. Manual working is slow and error-prone. We need an automated EIR engine to deliver compliant finance-cost recognition and accurate carrying-amount movements.        

2. How we are doing manually?          

You first frame the cash-flows properly (face loan vs. net disbursed after fees), then build an amortization grid that uses a guessed annual EIR to compute period interest on a day-count basis. With Goal Seek you back-solve the EIR so the final closing balance becomes zero.

3.Proposed Solution — AI-built RPA for EIR & Amortisation (Lovable)

A no-code/AI app built on Lovable that automates Effective Interest Rate (EIR) computation and generates a compliant amortisation schedule under Ind AS 109—eliminating manual Goal-Seek and formula errors.

4.How it works (workflow)

1. Input: Face loan, fees/charges, disbursement & EMI dates, rate basis, moratorium/prepayments (optional).
2. Compute: Solver engine derives EIR (XIRR-equivalent, day-count aware) and builds the full period-wise schedule.
3. Review & Controls: Rounding rules, leap-year handling, broken periods, disclosures; validation residual ≈ ₹0.
4. Export: One-click Excel/PDF and API push to ERP/GL with audit trail & versioning.

5.Tech stack (Lovable-generated)

6.Steps to Build This Tool

Prompt 1: I want to build a web-based finance tool that calculates the Effective Interest Rate (EIR) of a loan using the amortised cost method under Ind AS 109. The app should have a split layout with the following features:

➊ Left Side: Input Form (Loan Parameters) Sanctioned Loan Amount (₹) → Number input Annual Interest Rate (%) → Number input Processing Fee As Percentage (%) and one tab Fixed Amount (₹) → Number input Loan Tenure → Number input Unit → Dropdown (Months or Years) Button: “Calculate EIR”

 ➋ Right Side: Output Panel (EIR Calculation Results) Show Effective Interest Rate (EIR) in large bold font with 4 decimal places Show: Processing Fee (₹) Net Amount Disbursed = Sanctioned Loan - Processing Fee Total Interest Payable over tenure

➌ Cash Flow Table Initial Disbursement (Net) Monthly repayments (same EMI amount) Show month-wise breakdown (Month 1, 2, 3… till last month)

➍ Calculation Logic: Use the IRR/XIRR/Goal Seek method to compute the EIR based on: Initial cash inflow = Net disbursed amount (loan received by borrower) Future outflows = Equal monthly EMIs over tenure (based on sanctioned amount and nominal rate) Use a financial library or logic that can solve IRR numerically. Use this formulae (eirMonthly * 12 * 100)

Prompt 2: now make amortisation table : Date of Repayment, Period From, Period to Days, EMI, Closing Balance, Principal Repayment, Interest , in which Interest = for 1 st period = fair value of loan / loan amount - processing fees *EIR* days /365 from next period onwards = Closing balnce of 1st period * EIR* days/365 , Principal repayment = EMI - Interest , Closing balance = for first period = Loan amount - processing fees +interest - Principal repayment. Ask for EMI , Start period from, Start period To, Start date of Repayment