diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/AbstractLoanScheduleGenerator.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/AbstractLoanScheduleGenerator.java
index f00a9d94a..dc6612469 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/AbstractLoanScheduleGenerator.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/AbstractLoanScheduleGenerator.java
@@ -65,10 +65,11 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
                 this.paymentPeriodsInOneYearCalculator, mc);
 
         // 5. loop over the known set of 'scheduled due dates'
-        LocalDate repaymentPeriodStartDate = this.scheduledDateGenerator.idealDisbursementDateBasedOnFirstRepaymentDate(
+        final LocalDate idealDisbursementDate = this.scheduledDateGenerator.idealDisbursementDateBasedOnFirstRepaymentDate(
                 loanApplicationTerms.getLoanTermPeriodFrequencyType(), loanApplicationTerms.getRepaymentEvery(), scheduledDates);
 
-        LocalDate startDate = loanApplicationTerms.getExpectedDisbursementDate();
+        LocalDate periodStartDate = loanApplicationTerms.getExpectedDisbursementDate();
+        LocalDate periodStartDateApplicableForInterest = periodStartDate;
         int periodNumber = 1;
         Money totalCumulativePrincipal = principalDisbursed.zero();
         Money totalCumulativeInterest = principalDisbursed.zero();
@@ -76,18 +77,24 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
         Money outstandingBalance = principalDisbursed;
         for (final LocalDate scheduledDueDate : scheduledDates) {
 
-            final int daysInPeriod = Days.daysBetween(startDate, scheduledDueDate).getDays();
+            final int daysInPeriod = Days.daysBetween(periodStartDate, scheduledDueDate).getDays();
+            int daysInPeriodApplicableForInterest = daysInPeriod;
+
+            if (periodStartDate.isBefore(idealDisbursementDate)) {
+                periodStartDateApplicableForInterest = idealDisbursementDate;
+                daysInPeriodApplicableForInterest = Days.daysBetween(periodStartDateApplicableForInterest, scheduledDueDate).getDays();
+            }
 
             final double interestCalculationGraceOnRepaymentPeriodFraction = this.paymentPeriodsInOneYearCalculator
-                    .calculatePortionOfRepaymentPeriodInterestChargingGrace(repaymentPeriodStartDate, scheduledDueDate,
+                    .calculatePortionOfRepaymentPeriodInterestChargingGrace(periodStartDateApplicableForInterest, scheduledDueDate,
                             loanApplicationTerms.getInterestChargedFromLocalDate(), loanApplicationTerms.getLoanTermPeriodFrequencyType(),
                             loanApplicationTerms.getRepaymentEvery());
 
             // 5 determine principal,interest of repayment period
             final PrincipalInterest principalInterestForThisPeriod = calculatePrincipalInterestComponentsForPeriod(
                     this.paymentPeriodsInOneYearCalculator, interestCalculationGraceOnRepaymentPeriodFraction, totalCumulativePrincipal,
-                    totalCumulativeInterest, totalInterestChargedForFullLoanTerm, totalOutstandingInterestPaymentDueToGrace, daysInPeriod,
-                    outstandingBalance, loanApplicationTerms, periodNumber, mc);
+                    totalCumulativeInterest, totalInterestChargedForFullLoanTerm, totalOutstandingInterestPaymentDueToGrace,
+                    daysInPeriodApplicableForInterest, outstandingBalance, loanApplicationTerms, periodNumber, mc);
 
             // update cumulative fields for principal & interest
             totalCumulativePrincipal = totalCumulativePrincipal.plus(principalInterestForThisPeriod.principal());
@@ -98,8 +105,9 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
             outstandingBalance = outstandingBalance.minus(principalInterestForThisPeriod.principal());
 
             // 7. determine fees and penalties
-            final Money feeChargesForInstallment = cumulativeFeeChargesDueWithin(startDate, scheduledDueDate, loanCharges, currency);
-            final Money penaltyChargesForInstallment = cumulativePenaltyChargesDueWithin(startDate, scheduledDueDate, loanCharges, currency);
+            final Money feeChargesForInstallment = cumulativeFeeChargesDueWithin(periodStartDate, scheduledDueDate, loanCharges, currency);
+            final Money penaltyChargesForInstallment = cumulativePenaltyChargesDueWithin(periodStartDate, scheduledDueDate, loanCharges,
+                    currency);
 
             // 8. sum up real totalInstallmentDue from components
             final Money totalInstallmentDue = principalInterestForThisPeriod.principal() //
@@ -108,7 +116,7 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
                     .plus(penaltyChargesForInstallment);
 
             // 9. create repayment period from parts
-            final LoanScheduleModelPeriod installment = LoanScheduleModelRepaymentPeriod.repayment(periodNumber, startDate,
+            final LoanScheduleModelPeriod installment = LoanScheduleModelRepaymentPeriod.repayment(periodNumber, periodStartDate,
                     scheduledDueDate, principalInterestForThisPeriod.principal(), outstandingBalance,
                     principalInterestForThisPeriod.interest(), feeChargesForInstallment, penaltyChargesForInstallment, totalInstallmentDue);
             periods.add(installment);
@@ -120,8 +128,8 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
             totalFeeChargesCharged = totalFeeChargesCharged.add(feeChargesForInstallment.getAmount());
             totalPenaltyChargesCharged = totalPenaltyChargesCharged.add(penaltyChargesForInstallment.getAmount());
             totalRepaymentExpected = totalRepaymentExpected.add(totalInstallmentDue.getAmount());
-            startDate = scheduledDueDate;
-            repaymentPeriodStartDate = startDate;
+            periodStartDate = scheduledDueDate;
+            periodStartDateApplicableForInterest = periodStartDate;
 
             periodNumber++;
         }
@@ -133,7 +141,7 @@ public abstract class AbstractLoanScheduleGenerator implements LoanScheduleGener
 
     public abstract PrincipalInterest calculatePrincipalInterestComponentsForPeriod(PaymentPeriodsInOneYearCalculator calculator,
             double interestCalculationGraceOnRepaymentPeriodFraction, Money totalCumulativePrincipal, Money totalCumulativeInterest,
-            Money totalInterestDueForLoan, Money cumulatingInterestPaymentDueToGrace, int daysInPeriod, Money outstandingBalance,
+            Money totalInterestDueForLoan, Money cumulatingInterestPaymentDueToGrace, int daysInPeriodApplicableForInterest, Money outstandingBalance,
             LoanApplicationTerms loanApplicationTerms, int periodNumber, MathContext mc);
 
     protected final boolean isLastRepaymentPeriod(final int numberOfRepayments, final int periodNumber) {
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/DecliningBalanceInterestLoanScheduleGenerator.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/DecliningBalanceInterestLoanScheduleGenerator.java
index 09437f6e4..0ce3e671e 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/DecliningBalanceInterestLoanScheduleGenerator.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/DecliningBalanceInterestLoanScheduleGenerator.java
@@ -19,14 +19,14 @@ import org.mifosplatform.portfolio.loanproduct.domain.AmortizationMethod;
  * <li>Equal installment payments</li>
  * </ol>
  * </p>
- * 
+ *
  * <p>
  * When amortized using <i>equal principal payments</i>, the <b>principal
  * component</b> of each installment is fixed and <b>interest due</b> is
  * calculated from the <b>outstanding principal balance</b> resulting in a
  * different <b>total payment due</b> for each installment.
  * </p>
- * 
+ *
  * <p>
  * When amortized using <i>equal installments</i>, the <b>total payment due</b>
  * for each installment is fixed and is calculated using the excel like
@@ -42,17 +42,17 @@ public class DecliningBalanceInterestLoanScheduleGenerator extends AbstractLoanS
             final double interestCalculationGraceOnRepaymentPeriodFraction, final Money totalCumulativePrincipal,
             @SuppressWarnings("unused") final Money totalCumulativeInterest,
             @SuppressWarnings("unused") final Money totalInterestDueForLoan, final Money cumulatingInterestPaymentDueToGrace,
-            final int daysInPeriod, final Money outstandingBalance, final LoanApplicationTerms loanApplicationTerms,
+            final int daysInPeriodApplicableForInterest, final Money outstandingBalance, final LoanApplicationTerms loanApplicationTerms,
             final int periodNumber, final MathContext mc) {
 
         final PrincipalInterest result = loanApplicationTerms.calculateTotalInterestForPeriod(calculator,
-                interestCalculationGraceOnRepaymentPeriodFraction, periodNumber, mc, cumulatingInterestPaymentDueToGrace, daysInPeriod,
-                outstandingBalance);
+                interestCalculationGraceOnRepaymentPeriodFraction, periodNumber, mc, cumulatingInterestPaymentDueToGrace,
+                daysInPeriodApplicableForInterest, outstandingBalance);
 
         final Money interestForThisInstallment = result.interest();
 
-        Money principalForThisInstallment = loanApplicationTerms.calculateTotalPrincipalForPeriod(calculator, daysInPeriod,
-                outstandingBalance, periodNumber, mc);
+        Money principalForThisInstallment = loanApplicationTerms.calculateTotalPrincipalForPeriod(calculator,
+                daysInPeriodApplicableForInterest, outstandingBalance, periodNumber, mc);
 
         // update cumulative fields for principal & interest
         final Money interestBroughtFowardDueToGrace = result.interestPaymentDueToGrace();
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/FlatInterestLoanScheduleGenerator.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/FlatInterestLoanScheduleGenerator.java
index ee3eb4dbc..e7fbe6be2 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/FlatInterestLoanScheduleGenerator.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/FlatInterestLoanScheduleGenerator.java
@@ -15,14 +15,14 @@ public class FlatInterestLoanScheduleGenerator extends AbstractLoanScheduleGener
     public PrincipalInterest calculatePrincipalInterestComponentsForPeriod(final PaymentPeriodsInOneYearCalculator calculator,
             final double interestCalculationGraceOnRepaymentPeriodFraction, final Money totalCumulativePrincipal,
             final Money totalCumulativeInterest, final Money totalInterestDueForLoan, final Money cumulatingInterestPaymentDueToGrace,
-            final int daysInPeriod, final Money outstandingBalance, final LoanApplicationTerms loanApplicationTerms,
+            final int daysInPeriodApplicableForInterest, final Money outstandingBalance, final LoanApplicationTerms loanApplicationTerms,
             final int periodNumber, final MathContext mc) {
 
-        Money principalForThisInstallment = loanApplicationTerms.calculateTotalPrincipalForPeriod(calculator, daysInPeriod,
+        Money principalForThisInstallment = loanApplicationTerms.calculateTotalPrincipalForPeriod(calculator, daysInPeriodApplicableForInterest,
                 outstandingBalance, periodNumber, mc);
 
         final PrincipalInterest result = loanApplicationTerms.calculateTotalInterestForPeriod(calculator,
-                interestCalculationGraceOnRepaymentPeriodFraction, periodNumber, mc, cumulatingInterestPaymentDueToGrace, daysInPeriod,
+                interestCalculationGraceOnRepaymentPeriodFraction, periodNumber, mc, cumulatingInterestPaymentDueToGrace, daysInPeriodApplicableForInterest,
                 outstandingBalance);
         Money interestForThisInstallment = result.interest();
 
diff --git a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/LoanApplicationTerms.java b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/LoanApplicationTerms.java
index 4dd8cca6c..5399600c8 100644
--- a/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/LoanApplicationTerms.java
+++ b/mifosng-provider/src/main/java/org/mifosplatform/portfolio/loanaccount/loanschedule/domain/LoanApplicationTerms.java
@@ -288,7 +288,7 @@ public final class LoanApplicationTerms {
 
     public PrincipalInterest calculateTotalInterestForPeriod(final PaymentPeriodsInOneYearCalculator calculator,
             final double interestCalculationGraceOnRepaymentPeriodFraction, final int periodNumber, final MathContext mc,
-            final Money cumulatingInterestPaymentDueToGrace, final int daysInPeriod, final Money outstandingBalance) {
+            final Money cumulatingInterestPaymentDueToGrace, final int daysInPeriodApplicableForInterest, final Money outstandingBalance) {
 
         Money interestForInstallment = this.principal.zero();
         Money interestBroughtForwardDueToGrace = cumulatingInterestPaymentDueToGrace.copy();
@@ -318,10 +318,10 @@ public final class LoanApplicationTerms {
             case DECLINING_BALANCE:
 
                 final Money interestForThisInstallmentBeforeGrace = calculateDecliningInterestDueForInstallmentBeforeApplyingGrace(
-                        calculator, mc, daysInPeriod, outstandingBalance);
+                        calculator, mc, daysInPeriodApplicableForInterest, outstandingBalance);
 
                 final Money interestForThisInstallmentAfterGrace = calculateDecliningInterestDueForInstallmentAfterApplyingGrace(
-                        calculator, interestCalculationGraceOnRepaymentPeriodFraction, mc, daysInPeriod, outstandingBalance, periodNumber);
+                        calculator, interestCalculationGraceOnRepaymentPeriodFraction, mc, daysInPeriodApplicableForInterest, outstandingBalance, periodNumber);
 
                 interestForInstallment = interestForThisInstallmentAfterGrace;
                 if (interestForThisInstallmentAfterGrace.isGreaterThanZero()) {