As per the Reserve Bank of India directives, interest on loans and advances is compounded in India on which among the following basis?

[A]Monthly

[B]Quarterly

[C]Semi-annually

[D]Annually

**Monthly**

Compound interest is the Interest which is calculated not only on the initial principal but also the accumulated interest of prior periods. The more frequently interest is compounded, the higher the effective rate. In India interest on loans and advances is compounded on monthly basis as per RBI order.