6.5.3 Computation of Net Discount Accrual Amount for a Processing Day

The net discount accrual amount for a processing day is computed as follows:

• All future cash flows are discounted to the processing day using the IRR effective as of the processing day, and the net present value (NPV) of the contract as of the processing day is obtained.
• The till date discount accrual amount is computed using the following expression:
  
  
  
  

Where,

• TDA_n represents the Till Date Discount Accrual for n^th Accrual Date.
• NPV_n, the Net Present Value of the contract as of n^th Accrual Date.
• P_n, the Outstanding Principal of the contract as of n^th Accrual Date.
• DTA_s, the Discount to be accrued as of current IRR Effective Date.
• AI_n, the Current Period Accrued Interest as of n^th Accrual Date.
• DA_s, the Discount Accrued as of current IRR Effective Date.

The difference between the Till date discount accrual amount as of the previous processing day and the Till date discount accrual amount as of the current processing day is the Net Discount accrual amount that is realized as income as of the processing day. The expression used would be,

Where,

• NDA_n represents the Accrual for n^th Accrual Date.
• TDA_n, the Till Date Discount Accrual for n^th Accrual Date and
• TDA_n-1, the Till Date Discount Accrual for n-1^th Accrual Date.