1. Bilateral Loans
  2. Defining Attributes Specific to Loan product
  3. Setting Product Preferences
  4. Other Preferences tab

3.2.16 Other Preferences tab

You can enter below details in Other Preferences tab. For information on fields, refer to the field description table.

Table 3-9 Other Preferences

Field Description
Pay Past Schedules Using Pay Past Schedules option you can indicate whether for a back-dated loan that has schedules prior to today’s date, those schedules have to be liquidated when the loan is initiated. A back dated loan is one with a Value Date (initiation date) that is earlier than the date on which it is booked.

Example

Loans can be initiated as of
  • Today
  • A date in the future
  • A date in the past
Today’s date is 15 October 1997. Suppose you initiate a loan of 15,000 USD today, with the Value Date (date on which the loan comes into effect) as 15 September 1997, the system passes accounting entries for initiation as of 15 September 1997.

But if there had been an interest payment schedule for 30 September 1997, for 500 USD, then if you specify that back valued schedules should be liquidated, you can make the system pass accounting entries to liquidate this schedule also, when the loan is initiated. If you specify that back dated schedules are not to be liquidated, only accrual entries are passed till today.

Note that the entries associated with each event (initiation and liquidation in this case) are passed only if they have been defined for the product. Further, the accounts used are the ones defined for each entry.
Allowing Rollover You should specify whether a loan, involving the product you are defining, can be rolled over into a new loan if it is not liquidated on its Maturity Date.

If you specify that rollover is allowed for the product, it is applicable to all the loans involving the product. However, at the time of processing a specific loan involving this product, you can indicate that rollover is not allowed.

However, if you specify that rollover is not allowed for a product, you cannot rollover loans involving the product.

The terms of a rolled over loan can be the same as those of the original loan or they can be different. If the terms should be different, they should be specified during loan processing.
Allow Settlement Account Change Select the Allow Settlement Account Change check box to indicate the settlement account that you specify for a contract (in the Loan and Commitment - Contract Input screen) booked under this product, can be changed.
Anniversary Billing

Select this check box to specify that billing notices should be generated after the maturity date of the contract and on every anniversary date of maturity, if there is any amount due from the counter party.

Note:

  • The billing notices are generated on all anniversaries of the maturity date till the contract is completely liquidated.
  • The billing is applicable only for the overdue amount and for all the components (principal, interest and fee).
  • Anniversary billing option is applicable only for the fixed maturity type of loans.
Prepayment After Maturity Select this check box to specify if the value date of the payment exceeds the maturity date of the contract. You can specify a date beyond the next schedule date if the next immediate schedule date is the maturity date of the contract.

The value date of the pre-closure instruction can cross the maturity date of the contract if the contract is marked for rollover and rollover instruction of the contract is captured with Rollover mechanism as new version. The system defaults the value date of the pre-closure instruction based on the holiday treatment preferences maintained for the contract.

Note:

This check box is enabled only for deposit products.
Banker’s Acceptance This check box is enabled only if the payment type is Discounted or True Discounted for the drawdown product. Ensure to deselect Liqd of Interest. on Prepaid Principal and Allow Rollover before selecting Bankers Acceptance.
Allow schedules for discounted This check box is allowed for Discounted products. If this check box is selected, then you can define interim schedules for the main interest component.

If this check box is selected, then the new interest schedules are derived. Interest schedules are derived starting from the value date till the maturity date.

Interest amount is collected upfront on the schedule date and subsequent amount is updated for the next schedules based on principal. Interest calculation is always advance in discounted schedules.

If the interest recalculated is greater than the previous interest due, then the extra interest is debited from the customer.If the interest recalculated is less than the previous interest due, the extra interest collected needs to be credited to the customer.
SGEN Oracle Lending generates the settlement messages associated with loan contracts only if you opt for generation of settlement messages at the time of defining a product. At the time of creating a product, you can indicate whether you want to generate settlement messages for contracts, which you want to process under the product that you are defining.

Select the option SGEN Required, if you want to allow generation of settlement messages. Consequently, Oracle Lending generates settlement messages for contracts associated with the product. You have to specify the number of calendar days before the repayment date, when a settlement message has to be generated for the customer (as a reminder of the payment), if you have opted for generation of settlement messages. This is specified as Notice Days in the Preferences screen. The system checks for the settlement days prior to the due date against the currency holiday calendar and accordingly execute the holiday treatment, if the settlement date falls on a currency holiday.

Override Subsequent Rates If this check box is selected, then all the future date amendments, that is greater value date amendments are overridden with the rate/spread change. If this check box is not selected, then rate/spread applied till the next date amendment of value date.

This is applicable for Discounted, Bearing, and Amortized type of loan products.
Allow FX Variation If this check box is selected the system converts all FCY loans and displays the amount fields in LCY. The system calculates the tax, charges, IOF and displays the amount in local currency in Local Currency Equivalent and Exchange Rate fields of contract Charge/Tax screens. By default, this check box is disabled.
Liqd of Interest on Prepaid Principal If you select the Liqd of Interest on Prepaid Principal check box, you are not allowed to enter the Amount for interest liquidation. The amount is computed and liquidated by the system. In addition, in case of prepayment, the rate is recomputed based on the contract currency, tenor and amount. You can change the preference you have specified here, in the OL Schedule Payment screen.
Confirm Select the Confirm check box to indicate the confirmed status for loan products. This check box is enabled only if Product Type is Loan. By default, this check box is selected.

You can amend the Confirm check box at the product definition level. However, this amendment does not propagate to active/liquidated contracts except for new loan booking and future processing like rollover and Value Dated Amendment (VAMI).

Applying a Block on the Limit of a Credit Line You can block the limit of the credit line of a commitment contract to the extent of the amount of the commitment contract, by selecting the Apply Limits Block check box.

Note:

This is enabled only for commitment products.
Partial Prepayment Allowed Select the Partial Prepayment Allowed check box to indicate a partial prepayment can be made.
Reprice Product You can specify whether the amortized amount of the contract with the selected product can be transferred to a child contract.

Select Reprice Product check box to indicate any contract booked under this product can be re-priced.

This field is enabled only if:
  • The product is a Loan product
  • You have selected the option Bearing against the field Payment Type, the option Normal against the field Schedule Type.
When you enter a contract under a product that allows re-pricing, you have to do so through the Re-price Transaction screens. Such products are not available for contract booking through the OL Contract Online screen. You cannot transfer the unamortized amount if this option is not selected here.
Intra-Day Product Select the Intra-Day Product check box to indicate the product, for which you are specifying preferences, is an intra-day product. Once you select this box for a product, you can only enter intra-day deals under it. An intra-day deal is one wherein the Value Date and Maturity Date fall on the same day. The interest is calculated for one day.

Note:

  • When you enter a contract that uses an intra-day product, the fields Contract Value Date and Maturity Date are set to the system date in the OL Contract Online screen.
  • If you select the Intra-Day Product check box, the check box Pay Past Schedules is deselected and disabled.
LMA Participation The LMA Participation check box is enabled only for the loan products

Note:

If the LMA Participation check box is selected, then the OL product is considered as LMA product
You are not allowed clear the check box once the product is selected and authorized with selection. The value of the check box is copied when you copy an existing loan product with the check box selected.
Allow Partial Reduction The Allow partial Reduction check box is checked to allow partial reduction of commitment amount as per the commitment reduction schedule maintained in contracts. This check box is applicable only for commitment products

In case of insufficient availability, the partial commitment reduction will be processed based on the flag “Allow Partial reduction” at the commitment product level.
Track Accrued Interest Track Accrued Interest check box is checked to track accrued interest for credit utilization.
Recompute Schedules Recompute Schedules check box is checked to recompute schedules after the prepayment of loan amount.
Effective Cust Loan Rate Reqd TEAC can be used for reporting in all the loan liquidation advices to the customer. For printing the customer effective loan rate in customer advices you can enable the Customer Effective Loan Rate option. Details are explained in Bilateral UM section 4.2.21
Limits Tracking Required Limits Tracking Required check box is checked to check facility, collateral balances at contract level.
Effective Loan required TEA can be used for reporting in customer statements and to regulatory authorities. For printing the effective loan rate in customer advice and central bank reports you can enable the Effective Loan Rate option. Additionally, you also need to enable this option in the MM/Loans and Deposits Branch Conditions screen. Details are explained in Bilateral UM section 4.2.20.
Advance By Loan Check this box to create import bill. Import bill liquidation - Book bill by enabling 'Advance by Loan' check box in Bills and Collections Contract Input screen (BCDTRONL) Loan product enabled with 'Advance by Loan' option created in OBCL to be handed over to OBTF.
Rate Fixing Type Rate Fixing Type You can select rate fixing type as automatic or manual. By default, it is automatic. For more information on rate fixing, refer to Interest User Manual.
Interest on Sch.Amount Interest on Sch.Amount check box is checked, so interest is calculated on the interest schedule amount rather than total principal outstanding amount
Prime Loan Oracle Banking Corporate Lending enables you to pay the interest applicable on the principal. This is applicable only if you select the ‘Prime Loan’ check box.
Sequence Generation Required Sequence Generation Required is checked to generate MT210. This is needed in addition to SGEN flag.

Track Pay/Receive

In addition, you can also enter below details in Other Preferences tab.Select this check box to specify that back valued activity should be tracked through Pay / Receive infrastructure.

Note:

As part of discounted schedules changes, Track Pay/Receive is mandatory for non-bearing products.

Example

Consider a loan of 200,000 USD given to AIRBUS on December 01, 2007 with principal payment on every first of the month. The maturity date of the loan was 01-Mar-2008, Last payment was done on 01-Feb-2008 and the current scenario is depicted below:
Schedule date Amount Due(USD) Amount Settled (USD)
1-Jan-08 10,000.00 10,000.00
1-Feb-08 10,000.00 10,000.00
1-Mar-08 10,000.00 0.00
Current System date is 15-Feb-08 and a back valued VAMI with a value date as 15-Dec-2007 is done to increase the rate such that amount due for the interest gets changed. As a result of the VAMI the amount settled is adjusted automatically. The scenario after the VAMI is depicted below:
Schedule date Amount Due(USD) Amount Settled(USD) Pay/Receive
1-Jan-08 11,000.00 10,000.00 1000.00
1-Feb-08 11,000.00 10,000.00 0.00
1-Mar-08 11,000.00 0.00 0.00

Overpayment & Auto-Sch Adjustment

Select this check box to specify that overpayment and back valued activities should be allowed for a product. If amount due is changed due to rate change or back valued activities, then the amount settled is adjusted automatically by the system according to amount due. By default this check box is not selected.

Example

Consider a loan of 200,000 USD given to AIRBUS on December 01, 2007 with principal payment on every first of the month. The maturity date of the loan was 01-Feb-2008, Last payment was done on 01-Feb-2008 and the current scenario is depicted below:
Schedule date Amount Due(USD) Amount Settled (USD)
1-Jan-08 10,000.00 10,000.00
1-Feb-08 10,000.00 10,000.00
The contract status is liquidated and the rate for the underlying rate code is changed for the effective date of 15-Dec-2007 such that amount due for the interest gets changed. As a result of the rate change, system adjusts the liquidated schedules automatically. The scenario after the VAMI is depicted below:
Schedule date Amount Due(USD) Amount Settled (USD)
1-Jan-08 11,000.00 11,000.00
1-Feb-08 11,000.00 9,000.00

Rate change for Liquidated Schedules

Consider a loan of 200,000 USD given to AIRBUS on December 01, 2007 with principal payment on every first of the month. The maturity date of the loan was 01-Mar-2008, Last payment was done on 01-Feb-2008 and the current scenario is depicted below:
Schedule date Amount Due(USD) Amount Settled (USD)
1-Jan-08 10,000.00 10,000.00
1-Feb-08 10,000.00 10,000.00
1-Mar-08 10,000.00 0.00
Current System date is 15-Feb-08 and a back valued VAMI with a value date as 15-Dec-2007 is done to increase the rate such that amount due for the interest gets changed. As a result of the VAMI the amount to be settled is adjusted automatically. The scenario after the VAMI is depicted below:
Schedule date Amount Due(USD) Amount Settled (USD)
1-Jan-08 11,000.00 11,000.00
1-Feb-08 11,000.00 9,000.00
1-Mar-08 11,000.00 0.00

Note:

Both Track Pay/Receive and Overpayment & Auto-Sch Adjustment options cannot be selected simultaneously.
On selecting the Overpayment & Auto-Sch Adjustment check box, the system performs the following:
  • Payments are allowed beyond the amendment date.
  • Payments beyond any rate revision or rate fixing date can be done. If the total interest to be liquidated changes due to this, then the amount settled is adjusted automatically based on the net interest period.
  • Payments beyond payment can be done. Due to this payment, if the amount due is effected then the schedules are adjusted based on the net interest paid (Amount paid-refund amount-amount reversed) automatically.
  • Value dated amendment beyond rate revision/rate fixing date (only for principal increase and spread change).

Indicating the Automatic Schedule Movement for Holiday Treatment

You can choose to change maturity date whenever changes are made to the holiday calendar (for instance, a holiday is made a working day or vice versa). To specify the change in maturity date, choose the following options:

Table 3-10 Automatic Schedule Movement

Field Description
Change Maturity Schedules In case the maturity date falls on a holiday, you can choose to change future maturity date by choosing this option.
Calendar Change affecting contracts Whenever changes are made to the holiday calendar, you can specify the manner in which the maturity date is to be considered by choosing any one of the following options.
  • From working to holiday
  • From holiday to working
For adhoc holiday treatment, all the fields under Automatic Schedule Movement needs to be maintained. In Holiday Preferences screen, the various fields available for Disbursement/ Payment Schedules, Rate Revision Schedules, Maturity Schedules and Principal Schedules tabs are applicable for adhoc holiday treatment. You can select any of these fields.

Adhoc holiday treatment changes the schedule date during EOD. If you change working day to holiday or holiday to working day in any of the holiday maintenance screens - Local Holiday Maintenance (STDLOCHL), Currency Holiday Maintenance (STDCCHOL), or Financial Centre Holiday Maintenance (OLDFCHOL) screens, the system changes the next working /previous working day based on the holiday parameters during EOD in Disbursement/ Payment Schedules, Revision Schedules, Maturity Schedules, Principal Schedules tabs.

For more information on holiday maintenance screens, refer to Common Core - Core Entities and Services and Product Definition User Manual.

Specifying Loan Statement Generation Preferences

As part of the preferences you define for a product, you can indicate if a loan statement report needs to be generated for contracts involving the product. If loan statements are to be generated, you can indicate if the loan statements should be in a summary or detailed format.
If loan statements are to be generated for contracts involving the product, you have to indicate the frequency of statement generation. You can set the frequency to any one of the following options:
  • Annual
  • Semi-Annual
  • Quarterly
  • Monthly
  • Fortnightly
  • Weekly
  • Daily
Based on the frequency that you specify, you can also indicate the month/weekday for the generation of the statement. Thus, if you have set the loan statement generation frequency to Annual, Semi-Annual, or Quarterly, you have to indicate the month in which the first statement is to be generated.
Similarly, if you have indicated that statement generation is to be on a fortnightly or weekly basis, you should specify the day of the week on which the statement is to be generated. For instance, if you indicate that a weekly generation should be done on Thursday, the statement is generated every week on Thursdays.

When the frequency is set to monthly, then by default, the statement is generated on the last day of every month. You can also select a different day from the drop-down menu.

Note:

The product preferences that you indicate applies to all contracts involving the product. However, you can change these preferences while processing a specific contract.

Parent topic: Setting Product Preferences