Question 3

Instead of 1 loan been disbursed, assumed a portfolio of loans been disbursed with % distribution of tenure (on amount), interest rate and overall disbursal as follows :

Overall portfolio disbursal	100,000
Annualized Interest rate	15%
Monthly interest rate	1.25%

Assume all loans are disbursed at the above interest rate only, interest is applied monthly on declining balance method (same as in question 1)

Tenure %	Distribution
1	5.00%
2	5.00%
3	10.00%
4	2.00%
5	5.00%
6	25.00%
7	2.00%
8	2.00%
9	15.00%
10	2.00%
11	2.00%
12	25.00%

The above details are exactly same as question 2 but now assume that some loans also get foreclosed and the coincidental foreclosure curve is as follows

	1	2	3	4	5	6	7	8	9	10	11	12
Foreclosure Curve - POS	4.44%	2.58%	2.47%	2.35%	2.32%	2.36%	2.17%	2.22%	2.26%	2.17%	2.33%	2.72%

How to read the foreclosure curve

Suppose at the start of period 2 balance outstanding of the portfolio is 100, then apart from the normal EMI paydown, additional 2.58 will be paid as foreclosure

Similarly if at the start of period 5, balance outstanding of the portfolio is 50, then apart from the normal EMI paydown, additional 1.16 (i.e 2.32% * 50) will be paid as foreclosure

Answer the following question (complete the empty table)

1.what will be the balance outstanding of the whole portfolio at the end of every month

2.What is the payment received every month

3.What is the principal paid and interest paid every month

Balance outstanding at start of period		Payment received (EMI amount)	Principal paid	Interest paid	Balance outstanding at end of period
1	100,000
2
3
4
5
6
7
8
9
10
11
12