Explanation of EDI (Equated Daily Instalments)

Equated Daily Instalments (EDI) is a financial mechanism that facilitates loan repayments on a daily basis. Unlike traditional monthly Equated Monthly Instalments (EMIs), which are paid once a month, EDIs break down the repayment into smaller, daily amounts. This daily payment structure is particularly well-suited for businesses and individuals with daily cash flows, providing a more flexible and manageable way to meet financial obligations.

Key Features of EDI:

• Daily Repayments: Borrowers make daily payments towards their loan, aligning with their daily cash inflows.
• Risk Distribution: Risk is distributed better as the value at risk reduces daily, contributing to a higher recovery rate.
• Collections Control: Payment providers or platforms often have strategic control over loan recovery, reducing costs and improving efficiency.
• Early Warning Signals: Daily repayments enable lenders to identify defaulters early on, allowing for prompt intervention.
• Suitable for Microenterprises: EDI loans work well for microenterprises, especially those with daily revenue streams.

EDI Calculator Formula:

While the exact formula for calculating EDI depends on the specifics of the loan and interest structure, a basic formula can be derived from the standard loan repayment formula. The daily repayment amount (EDI) can be calculated using the following formula:

EDI = Total Loan Amount × Daily Interest Rate / (1 - (1 + Daily Interest Rate)^(-Number of Days))

Example Data for an EDI Calculator:

Let's consider a hypothetical scenario:

• Total Loan Amount: $10,000
• Annual Interest Rate: 12%
• Number of Days: 30

Daily Interest Rate = Annual Interest Rate / 365
EDI = Total Loan Amount × Daily Interest Rate / (1 - (1 + Daily Interest Rate)^(-Number of Days))

Additional Information for Website:

• Advantages of EDI: Discuss the benefits of EDI, such as daily cash flow alignment, risk reduction, and early default detection.
• Implementation Partners: Highlight potential partners for EDI implementation, such as payment platforms and technology partners.
• Success Stories: Share success stories or case studies of businesses that have benefited from EDI programs.
• FAQs: Provide a section with frequently asked questions about EDI, addressing common queries.
• Educational Resources: Offer informative content, such as articles and guides, explaining EDI in detail.