DSCR Calculation for MSME Loans: Worked Example
Understand debt service coverage ratio with an MSME cash-accrual and debt-obligation example.
Worked example: Cash available ₹36 lakh; annual debt service ₹24 lakh.
Assume a business has annual cash available for debt servicing of ₹36 lakh and total scheduled principal plus interest obligations of ₹24 lakh.
DSCR = Cash available for debt service ÷ Total debt service = 36 ÷ 24 = 1.50 times.
| Item | Amount |
|---|---|
| Cash available for debt service | ₹36 lakh |
| Principal due | ₹16 lakh |
| Interest due | ₹8 lakh |
| DSCR | 1.50× |
The definition of cash available can vary by bank and proposal format; do not automatically treat accounting profit as cash accrual. Review all existing and proposed debt obligations and test weaker sales scenarios.
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Assumptions and limitations
These examples are educational and use the stated illustrative assumptions. Actual interest and repayment calculations can depend on day-count convention, compounding, rounding, moratorium, fees, rate resets, sanction conditions and bank policy. Verify against the sanction letter and account statement.