In rural India, loans taken from local moneylenders (Sahukars/Mahajans) or within the community don't follow bank interest formulas. Instead, interest is calculated in "Rupees per hundred per month" (प्रति सैकड़ा). Our Mahajani Interest Calculator natively calculates this exact Desi village interest layout instantly.
How does Village / Sahukari Interest work?
Unlike banking systems which quote interest rates per annum (yearly), the desi system quotes rates per month for every ₹100 borrowed.
For example, if the rate is ₹3 percent per month (3% ₹ सैकड़ा), it literally means you pay ₹3 every month for every ₹100 you borrowed. Annually, this translates to 3 × 12 = 36% Annual Interest Rate.
The Calculation Logic
- 1. Calculate Monthly Interest: (Principal Amount / 100) × Rate per 100 per month.
- 2. Calculate Daily Interest: Monthly Interest / 30 (Usually assumed as 30-day month in rural transactions).
- 3. Find Duration: Calculate the exact difference between borrowed date and return date in months and leftover days.
- 4. Total Interest: (Monthly Interest × Months) + (Daily Interest × Leftover Days).
Frequently Asked Questions
In village terms, 2% simple interest means "₹2 every month for every ₹100 taken". If you borrow ₹10,000, your interest is ₹200 per month.
No, standard village/Mahajani loans do not compound monthly. It is generally simple interest calculated over the duration, though specific local customs might add unpaid interest to principal yearly.