1. Bilateral Loans
  2. Defining Attributes Specific to Loan product
  3. Financial Operations Tax Maintenance
  4. IOF Capitalization (IOF Lending)

3.3.1 IOF Capitalization (IOF Lending)

IOF Capitalization is applicable for Bearing Normal/Bearing Amortized type of loans.

If IOF Payment Method is chosen as Capitalization at product level, the calculation of IOF amount will be done in 3 steps.
  1. The IOF needs to be computed on original principal value.
  2. The result from the step 1 is used to compute the net IOF value for lending using the below formula;
    Net IOF value

  3. The result from step 2 is capitalized into the Principal and schedule is recalculated with new principal value.
IOF is collected into the IOF GL during contract initiation.
Following accounting entries have to be maintained for DSBR event.
Dr/Cr Accounting Role Amount Tag Amount
Dr Asset GL <Component>_CAP <IOF Amount>
Cr IOF_PAY_ACC <Component>_CAP <IOF Amount>
** PrincipalValue – Total contract principal amount

** TotalIOFValue – IOF value based on calculation

Parent topic: Financial Operations Tax Maintenance