diff --git a/erpnext/loan_management/doctype/loan/loan.json b/erpnext/loan_management/doctype/loan/loan.json
index c9f23ca..1067680 100644
--- a/erpnext/loan_management/doctype/loan/loan.json
+++ b/erpnext/loan_management/doctype/loan/loan.json
@@ -240,12 +240,14 @@
    "label": "Repayment Schedule"
   },
   {
+   "allow_on_submit": 1,
    "depends_on": "eval:doc.is_term_loan == 1",
    "fieldname": "repayment_schedule",
    "fieldtype": "Table",
    "label": "Repayment Schedule",
    "no_copy": 1,
-   "options": "Repayment Schedule"
+   "options": "Repayment Schedule",
+   "read_only": 1
   },
   {
    "fieldname": "section_break_17",
@@ -360,10 +362,11 @@
  "index_web_pages_for_search": 1,
  "is_submittable": 1,
  "links": [],
- "modified": "2021-04-19 18:10:32.360818",
+ "modified": "2021-10-20 08:28:16.796105",
  "modified_by": "Administrator",
  "module": "Loan Management",
  "name": "Loan",
+ "naming_rule": "Expression (old style)",
  "owner": "Administrator",
  "permissions": [
   {
diff --git a/erpnext/loan_management/doctype/loan/loan.py b/erpnext/loan_management/doctype/loan/loan.py
index 7dbd422..73134ee 100644
--- a/erpnext/loan_management/doctype/loan/loan.py
+++ b/erpnext/loan_management/doctype/loan/loan.py
@@ -65,7 +65,7 @@
 			self.rate_of_interest = frappe.db.get_value("Loan Type", self.loan_type, "rate_of_interest")
 
 		if self.repayment_method == "Repay Over Number of Periods":
-			self.monthly_repayment_amount = get_monthly_repayment_amount(self.repayment_method, self.loan_amount, self.rate_of_interest, self.repayment_periods)
+			self.monthly_repayment_amount = get_monthly_repayment_amount(self.loan_amount, self.rate_of_interest, self.repayment_periods)
 
 	def check_sanctioned_amount_limit(self):
 		sanctioned_amount_limit = get_sanctioned_amount_limit(self.applicant_type, self.applicant, self.company)
@@ -207,7 +207,7 @@
 		if monthly_repayment_amount > loan_amount:
 			frappe.throw(_("Monthly Repayment Amount cannot be greater than Loan Amount"))
 
-def get_monthly_repayment_amount(repayment_method, loan_amount, rate_of_interest, repayment_periods):
+def get_monthly_repayment_amount(loan_amount, rate_of_interest, repayment_periods):
 	if rate_of_interest:
 		monthly_interest_rate = flt(rate_of_interest) / (12 *100)
 		monthly_repayment_amount = math.ceil((loan_amount * monthly_interest_rate *
diff --git a/erpnext/loan_management/doctype/loan/test_loan.py b/erpnext/loan_management/doctype/loan/test_loan.py
index ec0aebb..c10cf36 100644
--- a/erpnext/loan_management/doctype/loan/test_loan.py
+++ b/erpnext/loan_management/doctype/loan/test_loan.py
@@ -297,6 +297,27 @@
 		self.assertEqual(amounts[0], 11250.00)
 		self.assertEqual(amounts[1], 78303.00)
 
+	def test_repayment_schedule_update(self):
+		loan = create_loan(self.applicant2, "Personal Loan", 200000, "Repay Over Number of Periods", 4,
+			applicant_type='Customer', repayment_start_date='2021-04-30', posting_date='2021-04-01')
+
+		loan.submit()
+
+		make_loan_disbursement_entry(loan.name, loan.loan_amount, disbursement_date='2021-04-01')
+
+		process_loan_interest_accrual_for_term_loans(posting_date='2021-05-01')
+		process_loan_interest_accrual_for_term_loans(posting_date='2021-06-01')
+
+		repayment_entry = create_repayment_entry(loan.name, self.applicant2, '2021-06-05', 120000)
+		repayment_entry.submit()
+
+		loan.load_from_db()
+
+		self.assertEqual(flt(loan.get('repayment_schedule')[3].principal_amount, 2), 32151.83)
+		self.assertEqual(flt(loan.get('repayment_schedule')[3].interest_amount, 2), 225.06)
+		self.assertEqual(flt(loan.get('repayment_schedule')[3].total_payment, 2), 32376.89)
+		self.assertEqual(flt(loan.get('repayment_schedule')[3].balance_loan_amount, 2), 0)
+
 	def test_security_shortfall(self):
 		pledges = [{
 			"loan_security": "Test Security 2",
@@ -940,18 +961,18 @@
 
 
 def create_loan(applicant, loan_type, loan_amount, repayment_method, repayment_periods,
-	repayment_start_date=None, posting_date=None):
+	applicant_type=None, repayment_start_date=None, posting_date=None):
 
 	loan = frappe.get_doc({
 		"doctype": "Loan",
-		"applicant_type": "Employee",
+		"applicant_type": applicant_type or "Employee",
 		"company": "_Test Company",
 		"applicant": applicant,
 		"loan_type": loan_type,
 		"loan_amount": loan_amount,
 		"repayment_method": repayment_method,
 		"repayment_periods": repayment_periods,
-		"repayment_start_date": nowdate(),
+		"repayment_start_date": repayment_start_date or nowdate(),
 		"is_term_loan": 1,
 		"posting_date": posting_date or nowdate()
 	})
diff --git a/erpnext/loan_management/doctype/loan_application/loan_application.py b/erpnext/loan_management/doctype/loan_application/loan_application.py
index e492920..e24692e 100644
--- a/erpnext/loan_management/doctype/loan_application/loan_application.py
+++ b/erpnext/loan_management/doctype/loan_application/loan_application.py
@@ -83,7 +83,7 @@
 
 		if self.is_term_loan:
 			if self.repayment_method == "Repay Over Number of Periods":
-				self.repayment_amount = get_monthly_repayment_amount(self.repayment_method, self.loan_amount, self.rate_of_interest, self.repayment_periods)
+				self.repayment_amount = get_monthly_repayment_amount(self.loan_amount, self.rate_of_interest, self.repayment_periods)
 
 			if self.repayment_method == "Repay Fixed Amount per Period":
 				monthly_interest_rate = flt(self.rate_of_interest) / (12 *100)
diff --git a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
index 93513a8..4cd4c75 100644
--- a/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
+++ b/erpnext/loan_management/doctype/loan_interest_accrual/loan_interest_accrual.py
@@ -76,6 +76,39 @@
 				})
 			)
 
+		if self.payable_principal_amount:
+			gle_map.append(
+				self.get_gl_dict({
+					"account": self.loan_account,
+					"party_type": self.applicant_type,
+					"party": self.applicant,
+					"against": self.interest_income_account,
+					"debit": self.payable_principal_amount,
+					"debit_in_account_currency": self.interest_amount,
+					"against_voucher_type": "Loan",
+					"against_voucher": self.loan,
+					"remarks": _("Interest accrued from {0} to {1} against loan: {2}").format(
+						self.last_accrual_date, self.posting_date, self.loan),
+					"cost_center": erpnext.get_default_cost_center(self.company),
+					"posting_date": self.posting_date
+				})
+			)
+
+			gle_map.append(
+				self.get_gl_dict({
+					"account": self.interest_income_account,
+					"against": self.loan_account,
+					"credit": self.payable_principal_amount,
+					"credit_in_account_currency":  self.interest_amount,
+					"against_voucher_type": "Loan",
+					"against_voucher": self.loan,
+					"remarks": ("Interest accrued from {0} to {1} against loan: {2}").format(
+						self.last_accrual_date, self.posting_date, self.loan),
+					"cost_center": erpnext.get_default_cost_center(self.company),
+					"posting_date": self.posting_date
+				})
+			)
+
 		if gle_map:
 			make_gl_entries(gle_map, cancel=cancel, adv_adj=adv_adj)
 
diff --git a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
index 13b7357..9f3fe76 100644
--- a/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
+++ b/erpnext/loan_management/doctype/loan_repayment/loan_repayment.py
@@ -6,7 +6,7 @@
 
 import frappe
 from frappe import _
-from frappe.utils import add_days, cint, date_diff, flt, get_datetime, getdate
+from frappe.utils import add_days, add_months, cint, date_diff, flt, get_datetime, getdate
 from six import iteritems
 
 import erpnext
@@ -38,10 +38,12 @@
 
 	def on_submit(self):
 		self.update_paid_amount()
+		self.update_repayment_schedule()
 		self.make_gl_entries()
 
 	def on_cancel(self):
 		self.mark_as_unpaid()
+		self.update_repayment_schedule()
 		self.ignore_linked_doctypes = ['GL Entry']
 		self.make_gl_entries(cancel=1)
 
@@ -164,6 +166,10 @@
 		if loan.status == "Loan Closure Requested":
 			frappe.db.set_value("Loan", self.against_loan, "status", "Disbursed")
 
+	def update_repayment_schedule(self):
+		if self.is_term_loan and self.principal_amount_paid > self.payable_principal_amount:
+			regenerate_repayment_schedule(self.against_loan)
+
 	def allocate_amounts(self, repayment_details):
 		self.set('repayment_details', [])
 		self.principal_amount_paid = 0
@@ -185,50 +191,93 @@
 
 			interest_paid -= self.total_penalty_paid
 
-		total_interest_paid = 0
-		# interest_paid = self.amount_paid - self.principal_amount_paid - self.penalty_amount
+		if self.is_term_loan:
+			interest_paid, updated_entries = self.allocate_interest_amount(interest_paid, repayment_details)
+			self.allocate_principal_amount_for_term_loans(interest_paid, repayment_details, updated_entries)
+		else:
+			interest_paid, updated_entries = self.allocate_interest_amount(interest_paid, repayment_details)
+			self.allocate_excess_payment_for_demand_loans(interest_paid, repayment_details)
+
+	def allocate_interest_amount(self, interest_paid, repayment_details):
+		updated_entries = {}
+		self.total_interest_paid = 0
+		idx = 1
 
 		if interest_paid > 0:
 			for lia, amounts in iteritems(repayment_details.get('pending_accrual_entries', [])):
-				if amounts['interest_amount'] + amounts['payable_principal_amount'] <= interest_paid:
+				interest_amount = 0
+				if amounts['interest_amount'] <= interest_paid:
 					interest_amount = amounts['interest_amount']
-					paid_principal = amounts['payable_principal_amount']
-					self.principal_amount_paid += paid_principal
-					interest_paid -= (interest_amount + paid_principal)
+					self.total_interest_paid += interest_amount
+					interest_paid -= interest_amount
 				elif interest_paid:
 					if interest_paid >= amounts['interest_amount']:
 						interest_amount = amounts['interest_amount']
-						paid_principal = interest_paid - interest_amount
-						self.principal_amount_paid += paid_principal
+						self.total_interest_paid += interest_amount
 						interest_paid = 0
 					else:
 						interest_amount = interest_paid
+						self.total_interest_paid += interest_amount
 						interest_paid = 0
-						paid_principal=0
 
-				total_interest_paid += interest_amount
-				self.append('repayment_details', {
-					'loan_interest_accrual': lia,
-					'paid_interest_amount': interest_amount,
-					'paid_principal_amount': paid_principal
-				})
+				if interest_amount:
+					self.append('repayment_details', {
+						'loan_interest_accrual': lia,
+						'paid_interest_amount': interest_amount,
+						'paid_principal_amount': 0
+					})
+					updated_entries[lia] = idx
+					idx += 1
 
+		return interest_paid, updated_entries
+
+	def allocate_principal_amount_for_term_loans(self, interest_paid, repayment_details, updated_entries):
+		if interest_paid > 0:
+			for lia, amounts in iteritems(repayment_details.get('pending_accrual_entries', [])):
+				paid_principal = 0
+				if amounts['payable_principal_amount'] <= interest_paid:
+					paid_principal = amounts['payable_principal_amount']
+					self.principal_amount_paid += paid_principal
+					interest_paid -= paid_principal
+				elif interest_paid:
+					if interest_paid >= amounts['payable_principal_amount']:
+						paid_principal = amounts['payable_principal_amount']
+						self.principal_amount_paid += paid_principal
+						interest_paid = 0
+					else:
+						paid_principal = interest_paid
+						self.principal_amount_paid += paid_principal
+						interest_paid = 0
+
+				if updated_entries.get(lia):
+					idx = updated_entries.get(lia)
+					self.get('repayment_details')[idx-1].paid_principal_amount += paid_principal
+				else:
+					self.append('repayment_details', {
+						'loan_interest_accrual': lia,
+						'paid_interest_amount': 0,
+						'paid_principal_amount': paid_principal
+					})
+
+		if interest_paid > 0:
+			self.principal_amount_paid += interest_paid
+
+	def allocate_excess_payment_for_demand_loans(self, interest_paid, repayment_details):
 		if repayment_details['unaccrued_interest'] and interest_paid > 0:
 			# no of days for which to accrue interest
 			# Interest can only be accrued for an entire day and not partial
 			if interest_paid > repayment_details['unaccrued_interest']:
 				interest_paid -= repayment_details['unaccrued_interest']
-				total_interest_paid += repayment_details['unaccrued_interest']
+				self.total_interest_paid += repayment_details['unaccrued_interest']
 			else:
 				# get no of days for which interest can be paid
 				per_day_interest = get_per_day_interest(self.pending_principal_amount,
 					self.rate_of_interest, self.posting_date)
 
 				no_of_days = cint(interest_paid/per_day_interest)
-				total_interest_paid += no_of_days * per_day_interest
+				self.total_interest_paid += no_of_days * per_day_interest
 				interest_paid -= no_of_days * per_day_interest
 
-		self.total_interest_paid = total_interest_paid
 		if interest_paid > 0:
 			self.principal_amount_paid += interest_paid
 
@@ -364,6 +413,54 @@
 	else:
 		return None, 0
 
+def regenerate_repayment_schedule(loan):
+	from erpnext.loan_management.doctype.loan.loan import get_monthly_repayment_amount
+
+	loan_doc = frappe.get_doc('Loan', loan)
+	next_accrual_date = None
+
+	for term in reversed(loan_doc.get('repayment_schedule')):
+		if not term.is_accrued:
+			next_accrual_date = term.payment_date
+
+		if not term.is_accrued:
+			loan_doc.remove(term)
+
+	loan_doc.save()
+
+	if loan_doc.status in ('Disbursed', 'Loan Closure Requested', 'Closed'):
+		balance_amount = loan_doc.total_payment - loan_doc.total_principal_paid \
+			- loan_doc.total_interest_payable - loan_doc.written_off_amount
+	else:
+		balance_amount = loan_doc.disbursed_amount - loan_doc.total_principal_paid \
+			- loan_doc.total_interest_payable - loan_doc.written_off_amount
+
+	monthly_repayment_amount = get_monthly_repayment_amount(loan_doc.loan_amount,
+		loan_doc.rate_of_interest, loan_doc.repayment_periods)
+
+	payment_date = next_accrual_date
+
+	while(balance_amount > 0):
+		interest_amount = flt(balance_amount * flt(loan_doc.rate_of_interest) / (12*100))
+		principal_amount = monthly_repayment_amount - interest_amount
+		balance_amount = flt(balance_amount + interest_amount - monthly_repayment_amount)
+		if balance_amount < 0:
+			principal_amount += balance_amount
+			balance_amount = 0.0
+
+		total_payment = principal_amount + interest_amount
+		loan_doc.append("repayment_schedule", {
+			"payment_date": payment_date,
+			"principal_amount": principal_amount,
+			"interest_amount": interest_amount,
+			"total_payment": total_payment,
+			"balance_loan_amount": balance_amount
+		})
+		next_payment_date = add_months(payment_date, 1)
+		payment_date = next_payment_date
+
+	loan_doc.save()
+
 # This function returns the amounts that are payable at the time of loan repayment based on posting date
 # So it pulls all the unpaid Loan Interest Accrual Entries and calculates the penalty if applicable