Because 20% of the compensation balance is reserved, there is still a balance: 1-20%=80%.
The effective interest rate = 10%/80%= 12.5%.
Extended data
The compensatory balance is the minimum deposit balance that the bank requires the borrower to keep in the bank according to the loan limit or a certain proportion of the actual loan amount (generally 10% to 20%). Compensatory balance helps banks reduce loan risks and compensate the risks they may suffer; For borrowing enterprises, the compensatory balance increases the real interest rate of borrowing, and the interest paid by enterprises remains unchanged, but it also increases the financial burden of enterprises.
Interest rate calculation: the actual interest rate of the compensatory balance loan = nominal interest rate /( 1- compensatory balance ratio)
Example: The enterprise borrows 6,543,800,000 yuan as compensation balance, the nominal interest rate is 654.38+02%, and the proportion of compensation balance is 654.38+00%. Then the actual enterprise can borrow1000× (1-10%) = 9 million yuan.
Real interest rate = annual interest/actual available loans
= nominal interest rate /( 1- compensatory balance ratio)
= 12%÷( 1- 10%)
= 13.33%
References:
Baidu Encyclopedia: Compensatory Balance