A commitment is a formal understanding between you and your customer that you are willing to advance a loan during a certain period in the future. A fee may be charged at the time of entering into this understanding. You can have a repayment schedule for this fee.

When a loan is disbursed against this commitment, since there is no movement of funds involved but only a setting aside of funds, you should specify that contingent entries are to be passed on initiation of the commitment, at the time of defining the commitment product.

The entries should be reversed on Maturity (if the commitment is not used), or whenever a loan involving the product (or loans are) is issued.

When a loan is linked to the commitment, commitment utilization entries should be defined for the loan. On the Maturity Date of the commitment, the reversal of the contingent entries should be defined.