DSCR calculator with RBI formula and average DSCR

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Work out your DSCR

Enter one year, then add more years for an average across the loan. The optional panel shows how much room is left for a new EMI.

Room for a new EMI, optional

DSCR a lender may want times

Use the minimum your lender asks for. The worked example below assumes 1.25.

Interest rate for the new loan % a year

An example rate, not a market rate.

Tenure for the new loan months

Enter profit after tax, interest and principal due for year 1 to see your DSCR.

DSCR, year 1 -

DSCR for each year entered
Year	Cash accruals plus interest	Principal plus interest	DSCR

Indicative. Lenders decide. Loan amounts are rounded down to the nearest ₹10,000.

How it is calculated

The DSCR formula and where it comes from

DSCR, the debt service coverage ratio, compares the cash a business generates with the payments its debt needs. The RBI describes it year by year, and across the life of a loan.

For one year

DSCR = (cash accruals + interest) ÷ (principal due + interest)

The RBI's wording for the relevant year adds net cash accruals to interest and finance charges, and divides by the current portion of long-term debt plus interest and finance charges. The current portion of long-term debt is the principal due in the year.

Net cash accruals as profit after tax plus depreciation and other non-cash charges is lender practice, not RBI text. A lender may adjust the figures.

Across the loan

average DSCR = total numerator ÷ total denominator

The RBI's wording for the period of the loan adds the numerators and the denominators over the years, then divides. This is a ratio of sums. Many online tools average the yearly ratios instead, so their answer can differ from this one.

Room for a new EMI is the year 1 numerator divided by the DSCR a lender wants, minus the year 1 denominator, divided by 12. The loan it supports is the inverse of the EMI formula.

Worked example

Worked example: one year, then three

This is an example business, not a real file. Year 1 first: profit after tax ₹8,00,000, depreciation ₹2,50,000, interest ₹3,50,000, principal due ₹6,00,000.

Year 1 DSCR worked step by step
Step	Working	Result
Cash accruals plus interest	₹8,00,000 + ₹2,50,000 + ₹3,50,000	₹14,00,000
Principal due plus interest	₹6,00,000 + ₹3,50,000	₹9,50,000
DSCR for year 1	₹14,00,000 ÷ ₹9,50,000	1.47

Three years, with the average

Three-year DSCR example with the average worked as a ratio of sums
Year	Profit after tax	Depreciation	Interest	Principal due	Cash accruals plus interest	Principal plus interest	DSCR
1	₹8,00,000	₹2,50,000	₹3,50,000	₹6,00,000	₹14,00,000	₹9,50,000	1.47
2	₹9,50,000	₹2,25,000	₹2,80,000	₹6,60,000	₹14,55,000	₹9,40,000	1.55
3	₹11,00,000	₹2,00,000	₹2,00,000	₹7,20,000	₹15,00,000	₹9,20,000	1.63
Average, a ratio of sums	All three years				₹43,55,000	₹28,10,000	1.55

The average is ₹43,55,000 divided by ₹28,10,000, which is 1.55. The mean of the three yearly ratios is 1.55, the same at two decimals here. The two methods differ when one year is very different, and this page follows the RBI's ratio of sums.

Room for a new EMI

At an assumed DSCR target of 1.25: ₹14,00,000 ÷ 1.25 = ₹11,20,000, minus ₹9,50,000 = ₹1,70,000 a year, which is ₹14,167 a month.
At an example 14% a year over 60 months, that room supports a loan of about ₹6,08,841, shown as ₹6,00,000.
At an assumed target of 1.50, the figure is -₹16,667 a year. At this target there is no room for a new EMI on these numbers.
A loss year: profit after tax of -₹2,00,000 with the same depreciation, interest and principal gives 0.42. Cash accruals then do not cover debt service that year.

Reading the result

How to read the result

A DSCR below 1 means cash accruals do not cover debt service in that year.
Each lender sets its own minimum, and lenders may adjust profit for related-party items or one-off gains and losses.
A higher DSCR means more cash is left after debt payments.
Turn your DSCR into a loan amount with the business loan eligibility calculator, and see the EMI on that amount with the business loan EMI calculator.

What moves it

What raises or lowers DSCR

Higher profit and higher depreciation raise cash accruals.
More interest and a heavier principal schedule raise the payments the cash has to cover.
A longer tenure lowers the principal due each year, so it can raise DSCR for a new loan.
Check your working capital ratios with the working capital calculator. For the loan types behind these numbers, see term loans and equipment financing.

Know the limits

Limits of this calculator

It uses the actual figures you enter for each year. A lender may use projections instead.
It does not adjust for related-party items, one-off gains or losses, or any adjustment a lender makes.
It does not look at your credit history, bank statements or collateral.

Good to know

Questions and answers

Straight answers on the method, the sources and what the numbers do and do not mean.

How do you calculate DSCR?

For one year, add net cash accruals to the interest and finance charges, and divide by the current portion of long-term debt plus the interest and finance charges. In the example, ₹14,00,000 divided by ₹9,50,000 gives a DSCR of 1.47. Net cash accruals here are profit after tax plus depreciation and other non-cash charges.

What is the DSCR formula lenders use in India?

The RBI's wording for the relevant year adds net cash accruals to interest and finance charges, and divides by the current portion of long-term debt plus interest and finance charges. Splitting net cash accruals into profit after tax plus depreciation is lender practice, not RBI text, and each lender may adjust it.

What is a good DSCR for a business loan?

Below 1 means cash accruals do not cover debt service. Each lender sets its own minimum, so ask your lender what it uses.

How do you calculate average DSCR?

Over the period of the loan, add up the numerator for every year, add up the denominator for every year, and divide. That is a ratio of sums, which follows the RBI's wording. In the example the three years give ₹43,55,000 divided by ₹28,10,000, which is 1.55. Many online tools average the yearly ratios instead. The two can differ when one year is very different from the rest.

How do you calculate DSCR from a balance sheet?

Profit after tax and depreciation come from the profit and loss account. The current portion of long-term debt, the principal due in the year, comes from the balance sheet notes or the loan repayment schedule. Interest and finance charges come from the profit and loss account.

Is depreciation added back in DSCR?

Yes. Depreciation is a non-cash charge, so it is added to profit after tax when working out net cash accruals. This is lender practice rather than RBI text.

How can I improve a low DSCR?

Lenders may see a higher DSCR if the business raises profit, a longer tenure lowers the principal due each year, or a costly short loan is repaid first. None of these is a promise. Lenders decide.

Does a DSCR below 1 mean my loan will be rejected?

Not by itself. A DSCR below 1 means cash accruals do not cover debt service in that year, and a lender looks at the whole file. Lenders decide. Capnix is not a lender.

Does using this calculator affect my CIBIL score?

No. It makes no credit enquiry and asks for no name, phone number or PAN. CIBIL is the credit bureau whose score and report lenders check. Like every page on this site, it uses the analytics described in our Privacy Policy and Cookie policy.

Keep going

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Sources

How to read these figures

Capnix is not a lender. Rates, amounts and approvals are decided by lenders. Rates shown here are examples, not offers.

DSCR and average DSCR wording: RBI/2020-21/34, 07-Sep-2020, annex of ratios, checked 02-Oct-2026.
Net cash accruals as profit after tax plus depreciation and other non-cash charges: lender practice, not RBI text.
Loan from EMI: the inverse of the standard EMI formula, a mathematical identity.

Last checked: 02-Oct-2026.