Explain the procedures about how to calculate bank interest?

Interest Calculation : 

General Ledger (Path: GL Accounting-Business transactions-Bank Account Interest Calculations)

1. Define Interest calculation type 'S' for Gl 'P' for AR/AP eg: 'S1' / 'P1'

2. Define Interest Ref.interest eg: 'S1' / 'P1'
3. Define Time Dependent Terms:
Give interest cal.indicator eg: 'S1' / 'P1'
Currency key : e.g. INR
Eff.from: e.g 01.04.2999
Sequential no. 01
Term: Credit Interest: Balance Interest/Arrears Interest
Ref.Interest rate: 'S1' / 'P1'
and save.

Repeat above steps and give sequential no. as '02'.
Term: Debit Interest:: Balance Interest/Arrears Interest
Ref.Int.rate: 'S1' / 'P1'

4. Enter Interest values: 
Ref 'F4' and select int.. 
Valid from :01.04.2999
Rate :10%

5.Interest Posting:
Prepare GL Account Balance Int.calculation
Account symbol: 0002 (gl account : Interest Paid)
Account symbol: 2000 (gl account : Loan account)

Note: Update Term loan GL account by Interest Indicator field. (FS00)

Above steps we can use for AR/AP Interest also (path: AR/AP - Bus.Transactions-Interest calculations)

Interest Posting: 
Prepare GL Account Balance Int.calculation
Account symbol: 0001 (gl account : Interest Received)
Account symbol: 1000 (gl account : A/R Reconciliation account)

Update Customer master record with Interest indicator.

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