JR Loan Advisors, Chennai: DSCR shows how many rupees of cash you earn for each ₹1 of loan instalment. Example: ₹1.62 crore of cash over 3 years against ₹90 lakh due gives an average DSCR of 1.80.
How does the calculator work?
- Cash for loans each year = profit after tax + depreciation + interest on term loans.
- Loan payments due each year = interest + principal on term loans.
- DSCR for a year = cash for loans ÷ loan payments due.
- Average DSCR = total cash for 3 years ÷ total payments for 3 years.
- Stress test cuts profit after tax by your % in every year, then works it out again.
Worked example
Year 1: (30 + 10 + 12) ÷ (12 + 20) = 52 ÷ 32 = 1.63. Year 2: 54 ÷ 30 = 1.80. Year 3: 56 ÷ 28 = 2.00. Average: 162 ÷ 90 = 1.80. Weakest year: 1.63. If profit falls 20%, the average drops to 141 ÷ 90 = 1.57 and the weakest year to 1.44. Still above 1.25.
How do you read the answer?
- Below 1.00: cash does not cover the instalments. The bank will say no or ask for changes.
- 1.00 to 1.25: tight. Ask for more years to repay, a smaller loan, or bring more of your own money.
- 1.25 or more: comfortable for most banks.
RBI does not set one DSCR number for all loans. One bank's published rule: Bank of Baroda health-sector loan asks for an average DSCR of 1.75 and no year below 1.25 (checked 1 Nov 2026). Your bank letter decides.
Want us to check your numbers before the bank does? WhatsApp +91 94450 93336. This is not a loan approval.
Formula reviewed by CA Jitendraa Rathi (ICAI 217936). Rough estimate, not a loan approval. Sources.
Written and reviewed by CA Jitendraa Rathi, Chartered Accountant (CA membership number 217936) · Ex-banker, 20 years of experience in credit and lending · LinkedInLast reviewed · Expert review: CA Jitendraa Rathi (ICAI 217936)
Frequently asked questions
What is DSCR in simple words?
DSCR tells the bank how many rupees of cash you make for every rupee of loan instalment you must pay. A DSCR of 1.5 means ₹1.50 of cash for every ₹1 due.
What DSCR does a bank want?
RBI does not set one number. Each bank sets its own. 1.25 or more in every year is a common floor. One published rule: Bank of Baroda asks for an average of 1.75 and no year below 1.25 on its health-sector loan.
Why add back interest on the top line?
Interest is paid out of the same cash the bank is checking. It is added back on top, then counted again in what you must pay below the line. So the ratio compares all cash before loan payments with all loan payments.
Which loans should I include?
Include every term loan: the new one and any old ones still being repaid. Do not include the cash credit limit principal, because that is rolled over, not repaid in instalments.
What does the stress test do?
It cuts your profit after tax by the percentage you enter, to show if you can still pay in a bad year. Banks like to see the ratio stay above 1 even after a cut.