Fixed deposits are favoured investments for a reason. The interest income is fixed and regular, and, in most cases, higher than the interest you get from savings accounts. However, the interest calculation differs based on monthly, quarterly, bi-annual, and yearly interest payouts. 


For investors, a solid understanding of how to calculate the interest receivable is very useful. It allows for easy comparison of returns based on FD tenors, interest rates, and other terms. For monthly interest payouts, you can calculate returns using three methods.


These are the simple interest, compound interest, and equation methods. Each of these formulas can be used to arrive at the same monthly interest payout for the same investment value. However, interest can also be calculated on a quarterly, bi-annual, or annual basis.


Know more about interest calculation aided by a concept illustrating ₹2 interest for ₹1 Lakh per month invested in an FD.

Calculation: ₹2 Interest for ₹1 Lakh in an FD

To understand how FD interest is calculated, it is useful to employ the ₹2 interest for ₹1 Lakh method. In this method, consider that your investment is effectively generating a return of 2% per month.  

Here are three ways to estimate the monthly earnings for ₹2 interest for ₹1 Lakh.

Calculation Method



‘₹2 Interest for ₹1 Lakh Per Month’ Method

₹2 interest per month indicates an interest earning of ₹2 on ₹100 invested in an FD.

Yearly interest rate: 2 x 12 = 24%

This 2% return per month lets you calculate ₹2 interest for ₹1 Lakh, as follows:

Monthly interest payout = 1,00,000 * 2/100 = ₹2,000

This makes the total interest earnings on an FD of ₹1 Lakh for a year ₹24,000. 

Simple Interest Method

The formula to calculate simple interest is:

(Principal * Rate * Time) / 100

Using the same figures from the example above, the yearly interest payout can be calculated using the formula: 1,00,000 * 24/100 * 1 = ₹24,000

Monthly interest earned: 24,000 / 12 = ₹2,000 

Compound Interest Method

The formula is as follows: [P*(1 + R)^nt] - P


P = Principal amount

R = Rate of interest 

n = Number of periods 

t = Time period 

In this example, the interest is considered to be compounded once a year. 

To calculate the ₹2 interest for ₹1 Lakh in an FD, apply the formula to get:

[1,00,000 X (1+24/100)^1*1] - 1,00,000 = ₹24,000

Monthly interest payout: 24,000/12 = ₹2,000

The calculation of compound interest is more layered, as it takes into account the number of times the interest is compounded. This amount is then added to the initial principal, generating higher interest. 

₹2 Interest for ₹1 Lakh Invested in an FD

The total interest per month that you can receive from an FD of ₹1 Lakh yielding ₹2 interest per month is ₹2,000, regardless of the calculation method you employ. Using this simple calculation method, you can arrive at the exact value of FD interest you are due to receive each month. 


If you are comparing numerous FD plans with different tenors and FD interest rates, manual calculations can be tiring. To simplify your computation, you can make use of online interest calculation tools. The Bajaj Markets FD calculator is one such digital tool you can rely on. 

It helps you make quick and accurate calculations. All you need to do is enter your FD investment amount, choose your maturity timeline, and interest rate. On Bajaj Markets browse from FD issuers and get started with an FD right away.


The information provided by BFDL is related to the rates provided by Banks and Deposit taking NBFCs as available from public domain and under no circumstances is intended to be source of advice or recommendation of any financial investment advice or endorsement of any sort. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers and use of such information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. Display of any intellectual property along with the related product information does not imply BFDL’s partnership with the owner of the intellectual property of such products and is solely for the purpose of information, unless otherwise provided by BFDL.

FAQs on How to Calculate ₹2 Interest for ₹1 Lakh Per Month

How much is the interest if FD interest is compounded twice in a year?

For a ₹2 interest for ₹1 Lakh FD with a tenor of one year, the interest amount is ₹25,440 for bi-annual interest compounding.

What percentage is ₹2 interest per month?

An interest of ₹2 a month is 2% interest per month or 24% per year.

Do all the interest calculation methods yield the same returns?

Yes, all interest calculation methods yield the same returns. However, the total interest and monthly payout may differ in the compound interest calculation method if it is compounded more than once in a year. 

What is the advantage of opting for monthly interest payouts?

Month interest payouts act as a steady stream of income for investors. This makes it easier for retirees and those without other income sources to manage day-to-day expenses or plan for short-term financial goals.

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