Loan term sheet OCR + IRR solve + period-wise schedule validation — EIR amortisation schedule automation under Ind AS 109 in under 30 seconds per facility.
For every Indian company carrying term loans on its balance sheet, EIR amortisation schedule computation under Ind AS 109 is a mandatory quarterly task that most mid-market finance teams still handle in bespoke Excel files — with no automated validation.
A controller managing five to thirty active borrowings must extract eleven fields per sanction letter, build a bespoke cash flow array for each repayment structure, solve for the IRR, and construct the period-wise schedule — all before the finance cost journal entries can be posted.
Under Ind AS 109 paragraph 5.1.1, processing fees, legal charges, and stamp duty must reduce the initial carrying amount — not be expensed upfront. A Rs 1 Cr loan with Rs 1,25,000 in fees produces an EIR that exceeds the contractual coupon, and the spread compounds across the full tenor. Missing this increases both finance cost and the liability closing balance.
Controllers typically copy one Excel model per facility forward each quarter, manually updating the opening carrying value. Formula overrides, version control failures, and copy-paste errors are the most common root cause of balance-sheet restatements in financial instrument accounting — and they pass visually unnoticed until an auditor computes the closing balance independently.
The statutory auditor requests the amortisation schedule as supporting evidence under ICAI SA 500 Audit Evidence. If the closing carrying value at maturity does not reconcile to zero — even by a rounding difference of Re 1 — the auditor raises a query, the controller traces the discrepancy for hours, and the period close is delayed by a day or more.
The controller time consumed per borrowing cycle on a manual EIR amortisation schedule workflow for a mid-market company with 10–30 active facilities. Under Ind AS 109 Appendix A, the EIR must be computed on initial recognition and re-applied to the opening carrying value every period — with no tolerance for the closing balance at maturity beyond ± Re 1.
Four regulatory anchors from Ind AS 109, Ind AS 107, ICAI guidance, and the Companies Act collectively require the amortised cost figure to be both precisely computed and independently verifiable — leaving no room for spreadsheet approximation at scale.
A financial liability is initially recognised at fair value minus directly attributable transaction costs (processing fees, legal charges, stamp duty). Expensing these costs upfront instead of capitalising them overstates finance cost and understates the liability opening balance, creating a chain of errors across the full amortisation schedule.
The Effective Interest Rate is defined as the rate that exactly discounts estimated future cash payments through the instrument's expected life to the gross carrying amount. Solving for this rate requires an iterative IRR computation on the net drawdown; the IASB's IFRS 9 Implementation Guidance confirms the closing-balance tolerance must be ± Re 1 (or currency equivalent).
Ind AS 107 Financial Instruments: Disclosures requires entities to disclose the carrying amount of financial liabilities measured at amortised cost by class, along with the effective interest rate and maturity profile. A Schedule to the Notes backed by the period-wise amortisation table satisfies this requirement and provides the auditor a traceable evidence chain.
Under SA 500 Audit Evidence, the auditor evaluates the sufficiency and appropriateness of evidence supporting the financial statement assertion. An amortisation schedule generated from extracted source fields — traceable to the original sanction letter — is more persuasive evidence than a hand-keyed spreadsheet where the auditor cannot independently verify the input data without re-reading every term sheet.
For mid-market companies running on Tally, Zoho Books, or a mid-tier ERP without a native EIR module, no system-generated amortisation schedule exists. The controller builds it manually at inception and rolls it forward each quarter — with a single input error in the fee amount or tenor field corrupting the entire schedule for the life of the loan.
Seven deterministic passes from a lender's sanction letter PDF to an audit-ready amortisation schedule — in under 30 seconds per facility, with every field traceable back to the source document.
Accepts the lender's sanction letter (PDF) and classifies it as a Term Sheet, routing it to the eleven-field extraction schema. Works on digitally generated PDFs and OCR-processed scanned letters from any bank format, including letters that bundle multiple facilities in Annexure A.
Extracts borrower_name, lender_name, facility_id, principal_amount, coupon_rate_pct, tenor_months, repayment_frequency, repayment_type, processing_fee, other_transaction_costs, and disbursement_date — the complete field set required by Ind AS 109 para 5.1.1 and B5.4.1.
Before any computation begins: principal must be positive (FAIL), tenor must be positive (FAIL), coupon rate must be 0–25% (WARNING), total fees must be below 10% of principal (WARNING), EIR must exceed coupon when fees are present (FAIL), and closing carrying value must reconcile to zero within ± Re 1 (FAIL). Any FAIL routes the record to the exception queue before output is surfaced.
Builds the correct repayment cash flow array based on repayment_type: a level annuity series for EMI (reducing-balance) facilities, an interest-only series with a single principal bullet for bullet-at-maturity structures. Adjusts period count and per-period cash flows for monthly, quarterly, half-yearly, and annual frequencies.
Runs an iterative IRR solver on the net drawdown (principal minus processing_fee plus other_transaction_costs) against the constructed cash flow array to produce the periodic EIR. Annualises and displays alongside the contractual coupon rate — the spread between them is the portion attributable to amortised transaction costs per period.
For each period in the tenor (up to 60 rows for a monthly 5-year EMI loan): opening carrying value × periodic EIR = interest accrual; cash payment for the period; closing carrying value = opening + interest − cash payment. The table runs for the full tenor and is the primary output the controller uses to post quarterly finance cost journal entries.
The final-period closing carrying value is checked against zero within the ± Re 1 tolerance mandated by Ind AS 109 Appendix A. A structured Excel amortisation schedule — facility metadata in the header, period-wise rows in the body, reconciliation row at the foot — is generated for direct inclusion in the audit file as evidence under ICAI SA 500.
A battery of synthetic test scenarios that exercise every failure mode seen in real-world term sheet data. Each scenario produces a deterministic outcome an auditor or controller can verify in seconds.
The workflow ships with one consolidated six-page sanction letter that bundles the clean baseline facility plus Annexure A — a 60-facility group borrowing schedule that plants every exception type.
All eleven fields extracted correctly. Total fees of Rs 1,25,000 (1.25% of principal) deducted from principal to net drawdown of Rs 98,75,000 before IRR solve. Per Ind AS 109 para 5.1.1, the fee amortisation is embedded in the EIR spread of 28 bps over the contractual coupon.
With no transaction costs, the EIR collapses to the contractual coupon rate of 9.5% — the expected outcome confirmed in the IASB's IFRS 9 Implementation Guidance illustrative example. The EIR-above-coupon check passes by definition. No fee amortisation component in the schedule.
Heavy front-loading of transaction costs materially widens the EIR-coupon spread by over 245 bps. The fees-reasonable check confirms that 8.5% is below the 10% threshold. The period-wise schedule shows visibly accelerated interest accrual in early periods due to the higher EIR base — a pattern controllers must track correctly for their annual interest-expense disclosures under Ind AS 107.
The workflow routed this record to the Exceptions queue with an Invalid status badge before attempting any EIR computation — preventing a divide-by-zero condition from propagating silently into downstream journal entries. This is the most dangerous silent failure mode in manual Excel-based workflows: a zero or blank tenor passes visually unnoticed until the IRR solver returns an error.
A workflow that previously consumed two to three days of controller time per borrowing — building bespoke Excel models, solving for the EIR, and verifying the closing balance — completes in under 30 seconds per facility on Cadel, with six deterministic validation checks that catch every consequential error class before output is surfaced.
The six validation checks fire before any schedule is presented — a zero tenor, a fee load above 10%, or an EIR that fails to exceed the coupon are caught at the input stage. In manual Excel workflows these errors pass silently and compound across every period of the amortisation schedule, producing a permanently misstated liability balance requiring restatement under Ind AS 8 Accounting Policies.
The Excel export carries facility metadata, the computed EIR to six decimal places, the full period-wise table, and a reconciliation row confirming the closing balance is zero. This satisfies the evidence requirements under ICAI SA 500 and provides the period-by-period interest accrual figures the controller needs to post quarterly finance cost entries in the general ledger without any further calculation.
Annexure A in the sample sanction letter contains 60 facilities. Cadel processes each row independently and aggregates all results into a single Dashboard view with sortable columns for EIR, closing balance status, and exception type. Reviewing a 60-facility group borrowing portfolio — manually a two-day exercise — becomes a sub-minute triage of the Exceptions queue.
The questions finance controllers, CFOs, and statutory auditors ask most often before deploying EIR amortisation automation.
Upload the lender's loan term sheet (sanction letter) as a PDF. Cadel classifies it automatically, extracts the eleven facility fields, and computes the Ind AS 109 Effective Interest Rate and amortisation schedule. Annexure A in the sample term sheet schedules the full group borrowing portfolio for the period.
It implements the Effective Interest Method defined in Ind AS 109, Appendix A and paragraphs 5.1.1 and B5.4.1–B5.4.7. The workflow solves for the rate that discounts the contractual future cash payments to the net cash drawdown (principal minus transaction costs), then applies that rate to the opening carrying value each period to derive the interest charge. IASB's IFRS 9 Implementation Guidance illustrative examples are used as cross-checks on the IRR solver output.
Under Ind AS 109 paragraph 5.1.1, directly attributable transaction costs reduce the initial carrying amount of the liability. The workflow deducts the processing_fee and other_transaction_costs (legal/stamp duty) from the disbursed principal to compute the net drawdown, then solves for the EIR on that adjusted cash flow series. A FAIL is raised if fees are non-zero yet the computed EIR does not exceed the contractual coupon — which would indicate an arithmetic error in the IRR solve.
Yes. The cash-flow engine accepts EMI (reducing-balance) and bullet-at-maturity structures across monthly, quarterly, half-yearly and annual frequencies. For a bullet facility it builds interest-only instalments with a single principal repayment at maturity and validates that the closing carrying value reconciles to zero within Re 1. The repayment_type and repayment_frequency fields extracted from the sanction letter drive the array construction automatically.
Six checks run per facility: principal must be positive (FAIL), tenor must be positive (FAIL), the coupon rate must be 0–25% (WARNING), total fees must be below 10% of principal (WARNING), the EIR must exceed the coupon when fees are present (FAIL), and the closing balance must reconcile to zero at maturity (FAIL). Anything that trips is surfaced in the Exceptions view with the specific rule named, the extracted field value, and a direct link to the source document.
Each processed term sheet produces a timestamped record of the extracted inputs, the EIR to six decimal places, the full period-wise amortisation table, and the six validation results. The Excel export carries a reconciliation row proving the closing balance is zero, designed as a Schedule to the Notes under Ind AS 107 and as an audit-evidence workpaper under ICAI SA 500 Audit Evidence.
The current release generates an Excel amortisation schedule that imports into any ERP as a journal-entry upload. The period-wise interest rows map to a debit to Finance Cost and a credit to Financial Liability — Amortised Cost, with the carrying-value column giving the balance-sheet figure for the period. Direct ERP connectors for auto-posting to Tally Prime, NetSuite, and SAP are on the roadmap.
The extraction engine applies OCR and attempts all eleven fields. If a mandatory field — principal, tenor or coupon — cannot be read with confidence, the record is routed to the Exceptions queue as Extraction Failed with the unparsed fields highlighted. The principal-positive and tenor-positive FAIL checks act as a downstream safety net so no schedule is built from a zero or null input.
IFRS 9 and Ind AS 109 are substantially converged on the effective interest method — both define EIR in Appendix A as the rate that exactly discounts estimated future cash payments to the gross carrying amount of the financial liability, and both impose the same transaction-cost capitalisation rule (IFRS 9 para 5.1.1 = Ind AS 109 para 5.1.1). The primary Ind AS carve-out is the deferred effective date for macro-hedge accounting, which does not affect EIR amortisation mechanics. For entities reporting under both frameworks, the amortisation schedule Cadel generates satisfies both IFRS 9 and Ind AS 109 without modification.
Yes. The sample sanction letter includes Annexure A, a 60-facility group borrowing schedule. Cadel processes each facility row independently, running all six validation checks per record and routing any exceptions to the Exceptions queue. The Dashboard aggregates all facilities from the upload run into a single view with sortable columns for EIR, closing balance status, and exception type — turning a two-day portfolio review into a sub-minute triage.
