1. Bilateral Loans
  2. Disbursing a Loan
  3. Preferences for a Loan
  4. Setting Loan Schedule Preferences
  5. Specifying Other Schedule Details

4.3.1.5 Specifying Other Schedule Details

Table 4-14 Specifying Other Details

Fields Description
Ascertaining availability of funds before an automatic liquidation The customer’s repayment account as per instructions can be debited automatically by the system. However, you can specify that the availability of funds for liquidation of the various components (Principal, Interest, Charges, and so on) of the loan must be ascertained before liquidation.

If you opt for verification of funds, the system verifies the account for sufficient funds to liquidate the components (in the order specified, in the Liquidation Order Screen). If sufficient funds are available, the entire amount is liquidated. If not, and you have allowed partial liquidation of schedules, the schedule is liquidated to the extent of funds available. If you have not allowed partial liquidation of schedules, the system marks the schedule as outstanding.

If you have indicated that the availability of funds has to be ascertained, the system verifies the account for sufficient funds to liquidate the components (in the order specified, in the Liquidation Order Screen). If sufficient funds are available, the entire amount is liquidated. If the funds are insufficient, and you have allowed partial liquidation of schedules, the schedule is liquidated to the extent of funds available. The payment schedules for those components, which have not been liquidated or have been partly liquidated, are left as outstanding. Aging analysis and penalty on such loans are carried out as specified for the product.

Example

You have a loan on which penalty interest has been applied, as the interest was not paid on the scheduled date. There are several schedules for several components falling due on the same date, they are serviced by the same repayment account and there are insufficient funds in the account. You have specified the liquidation order as Penalty interest (first priority), interest (next), and principal (last). Thus the penalty interest is liquidated first and the interest next. If the funds in the repayment account are not enough to liquidate the principal, it is left outstanding.

Note:

If you have allowed a debit balance for the repayment account, all the components are liquidated leaving the repayment account with a debit balance. (On this debit balance, debit interest as specified for the type of account is applied through the Interest and Charges sub-system.) In addition, if you have opted to track the contract under a credit line, the system liquidates schedules from the repayment account to the extent of the line limit (that is, over and above the debit balance limit you have set).
If a debit balance has not been allowed, the schedules are liquidated to the extent of the credit line limit. If you have disallowed a debit balance in the account, and have not associated the contract with a credit line, schedules with insufficient funds for liquidation are marked as such. Aging analysis are take over.
This feature is of significance when:
  • The components have the same schedule dates, and are serviced by a single repayment account.
  • The funds in the repayment account are insufficient
The component(s) for which funds are available is liquidated in the order that you have specified, in the Liquidation Order screen.
Loans with payments, which have not been processed due to non-availability of funds, appears in the Exception Report, generated by the Automatic Contract Update function for the day.

Note:

For the final principal payment on maturity, the availability of funds in the payment account is always verified.
Liquidate Back Valued Schedules If you have specified, while defining the product, that for a back-dated loan (which has an initiation date which falls before today’s date), with repayment schedules prior to today’s date, the schedules have to be liquidated when the loan is initiated, the same applies to the loan you are entering. However, you can choose not to liquidate back valued schedules.

Example

Loans can be initiated as of today, a date in the future, or as of a date in the past.

Today’s date is 15 October 1997. Suppose you initiate a loan today, of USD 15,000 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 September 15.

However, there had been an interest payment schedule for 30 September1997, for USD 500. If you specify that back valued schedules should be liquidated, then you can make the system pass accounting entries to liquidate this schedule when the loan is initiated.

If you specify that back dated schedules are not to be liquidated only accrual entries are passed till today.

The entries associated with each event (initiation and liquidation in this case), is passed only if they have been defined for the product. Further, the accounts used are the ones defined for each entry.
Deduct Tax On Capitalisation If you choose to capitalize the interest earned on loans, the interest is added to the principal on the schedule date. However, it is important to note that only the main interest component can be capitalized. For capitalization of interest, you can choose to deduct tax and add only the net interest (Interest – tax) to the principal of the loan. To achieve this, select the option Deduct Tax on Capitalization.

If you do not select this option, interest is added to the loan principal along with the associated tax component for capitalization.
Suppress Revision Notice Select this check box to suppress the rollover advice prior to rate revision. You cannot edit the rate revision notice days if this check box is selected.
Allow schedules for discounted This check box is defaulted from the product level. You can change at the contract level. If this check box is selected, you need to have schedules started from the value date of the contract for the main interest component. As part of disbursement, only first schedule interest is liquidated.

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.
Revision Notice Days The notice days for rate revision to generate the rollover advice get defaulted here when you select the product for this contract. However, you can edit the notice days here, if Suppress Revision Notice flag is deselected.
Allowing Cost of Credit Valuations The system displays the option entered at the product level. If the option is deselected at the product level, it is disabled in this screen and you cannot select this option at the contract level. If this option is selected at the product level, then you can deselect it. During contract amendment, you can select or deselect it based on its value in the previous version.

If the option is currently not selected, the system automatically select this option if the userdefined status changes to Non-performing for the commitment or for any of the loans underlying the commitment. However, you can deselect it.

If this option is selected and the commitment is in Non-performing status, the system derives the cost of credit valuations based on the data received from RAPID and apply them to the commitment. If this option is selected and the commitment is in Performing status then system derives the cost of credit valuations based on the data received from RAPID and trigger recovery for reserve decrease and rebalancing of write-off.

If this option is not selected, then system does not perform cost of credit valuation for the commitment or loans underlying it irrespective of whether the contract status is Performing or Non-performing.

Propagate Status Change to Loan You can change this option while creating or amending a commitment. If you are linking a loan to a commitment and this option is selected for the particular commitment, then the status is propagated from the commitment to the loan. This is applicable only if the mode of changing status for the commitment and the underlying loan is manual.

If this option is selected and a new non-performing commitment is booked, the system assigns the non-performing status to any loan that is booked under this commitment. The system does not allow you to change the status to performing for the booked loan. Similarly, a loan that is booked under a commitment with status Performing is also assigned the same status, even if you assign the non-performing status for the loan through this screen. You cannot change this status for the loan to non-performing.

When multiple statuses are maintained in commitment and/or loan products, then the status change at the loan level is determined by the ‘Status Sequence Number’ maintained at the product level.
Grace Days For commitment contracts, system defaults the value maintained for Grace Days at the commitment product level. However, you can edit this value during contract booking and contract amendment. In case of contract amendment, the amended value is applicable to future schedules only.
For loan contracts linked to commitments, system displays the following override message when you exit the Linkage tab:
Grace Days for the loan will be 
defaulted from the commitment contract, do you 
wish to continue?
If you accept the override message, then system defaults the value of Grace Days from the linked commitment contract and over-writes the grace days from the loan product. You can reject the override message to retain the existing value of Grace Days.
For Loan contracts that are not linked to commitments, system defaults the value of Grace Days defined for the loan product to the contract. However, you can edit this value during contract booking and contract amendment. In case of contract amendment, the amended value is applicable to future calculations of late payment charges only.

When a loan contract is delinked from a commitment, system retains the default value of Grace Days for the loan contract.

The grace days used for penalty computation are the calendar days without considering any holidays.

When Payment Delay Days is given, then Grace Period starts from Pay By Date. If payment is made after Grace Period, then the penalty starts from Pay By Date.

Schedule Cutoff Days Schedule Cutoff Days is supported for Normal and Capitalized schedule type. Reporting component’s accrual and liquidation is also supported. By default, Schedule Cutoff Days is 0. If there is a prepayment of any schedule and the difference between the schedule and the payment date is less than the Schedule Cutoff Days provided at contract level then the due amount for the residual days is shifted to the next schedule date.
Verify Billed Amount The system defaults it to Yes, however you are allowed to amend it. When the check box is selected, the system verifies the billed amount for the schedule and the amount due, and liquidates the least of the two.

The system liquidates the residual amount as part of next schedules auto liquidation procedure, provided the billing has not been suppressed for the component.

Note:

The system does not perform auto liquidation of least of billed amount and due amount, if the bill has not been generated or has been suppressed for a component. In such cases, the system performs auto liquidation process.

Example

Let us assume the following:
A contract is booked with details as below:
  • Contract Value Date - 01-May-2008
  • Maturity Date - 01-May-2009
  • Repayment Schedule of Interest - Monthly
  • Repayment Schedule of Principal - Bullet
  • Liquidation Mode - Auto for both Interest and Principal
  • Billing Days for Interest - 5
  • Billing Date for 1st schedule due on 01-Jun-2008 – 27-May-2008.
On 27-May-2008 bill is generated Billed Amount - USD 1000 and on 01-Jun-2008 the interest amount is scheduled to be liquidated. Due to Interest Rate change, the due amount on 01- Jun-2008 recomputed as USD 1200.
Assuming Verify Billed Amount is selected, the amount liquidated will be USD 1000. The remaining amount of USD 200 is liquidated as part of next schedules auto liquidation procedure, provided the billing is not suppressed for the component.

Note:

  • If you change the liquidation mode from manual to auto, then the system liquidates the least amount of billed amount and due amount as part of that day’s EOD batch provided Verify Billed Amount is selected.
  • You cannot amend the Verify Billed Amount as part of Contract Amendment.
  • Even manually billed / re-billed amount, that is., manually generated is considered for billed amount.
  • In case if the billing (for the residual amount) is happens as part of next billing schedule then the liquidation happens as part of next schedule.
  • It is not applicable for Installment type of loans.
Schedule Upload In case of a new contract, instead of defaulting the schedules you can upload the schedule using Browse button. You can upload file only with *.csv extension.

Note:

You cannot upload the .csv file during CAMD operation. Choose file option gets enabled only for New contract creation not for CAMD operation.
The system performs the following validations during repayment schedule upload.
  • Duplicate schedule definitions with same start date is not allowed.
  • Schedule start date and end date cannot be later than maturity date.
  • Schedule start date cannot be lesser than application date.
  • Schedule start date and end date should be within loan contract start and end date.
  • If upload is successful then the system displays a message saying 
    The upload is successful.
  • Once the schedules are uploaded successfully, the system defaults the schedules into Schedules Details section.
  • Schedules are not uploaded even if one validation is failed. You have to re-upload after correcting the details.
  • Holiday treatment is applicable for the schedules once the schedules are uploaded.

Schedule Details

  • Capitalize
    By default, this check box is not selected. When you select Capitalize check box for a loan contract where the liquidation mode is manual, the system displays the below override message.
    Liquidation Mode should be auto for auto capitalized contracts.
    If you click Ok, the system changes the liquidation mode to Auto and proceed to save the contract.
    If you click Cancel, the system clears Capitalize check box and proceeds to save the contract.

    Note:

    Revision schedule for a penal component after contract tenor is allowed.
  • Capitalize due to Insufficient Funds
    This check box is supported only for Bearing Normal loans. This functionality is supported for current, back dated and future date schedules.
    • In case of contract creation, you can select the schedules and mark the Capitalize due to Insufficient Funds check box which needs to be auto capitalized. The system automatically capitalizes the back-dated schedules if any found during the contract save.
    • In case of contract amendment, you can select the schedules and mark the Capitalize due to Insufficient Funds check box which needs to be auto capitalized.
    • At EOD, during AUTOCAP process, the system capitalizes the contracts having Capitalize check box set to Y which are due today. If the interest availability amount is less than the due amount then the system will not capitalize the schedule and mark the Capitalize check box to N.
    • At EOD, during AUTOLIQ process, the system checks if the funds are available for liquidation.
      • If there are no funds available, then the system skips the AUTOLIQ process for that particular contract.
      • If there are partial funds available, then the system liquidates only the extent of the amount that is available.
      • If there are enough funds available, then the system liquidates the entire due amount of the schedule.
    • At EOD, during AUTCAPWR process, system calls the AUTOCAP process to capitalize the schedule having the Capitalize due to Insufficient Funds check box as Y only for the extent of the unpaid amount
      • Interest Reserve Availability validation is not considered.
      • The capitalization process is based on Pay by Date rather than Due Date.

Commitment Blockage

You can define utilization blockage period for the commitment contract during a certain period of the year. Commitment Utilization Blockage is applicable for revolving commitments only.

Table 4-15 Commitment Blockage Details

Fields Description
Start Month Select the commitment blockage start month from the drop-down list. The list specifies 12 months of the year.
Start Day Select the commitment blockage start day from the drop-down list. The list specifies days of the month you have selected.
End Month Select the commitment blockage end month from the drop-down list. The list specifies 12 months of the year.
End Day Select the last day of commitment blockage from the drop-down list. The list specifies days of the month you have selected.
During this period utilization is not allowed for any activities including the following:
  • New loan booking
  • Loan VAMI (Principal Increase)
  • Loan Renewals with capitalization of interest
  • Loan Renewals with Principal Increase
You can amend the scheduled blockage date after the contract is authorized. System does not perform validation for already captured activities for the revised blocking period while amending the blocking period at the commitment contract level.
During loan input if rollover allowed and maturity date is falling in between of blockage period of linked commitment, and the rollover amount is Principal + Interest or Principal + (Interest- Tax) or special amount which is greater than loan outstanding, system throws an override. Also an override is given for the same validation while modifying blockage period of a commitment.

Specifying Reversal of Components

For a component the schedules you have defined for the product is applied to the fee, by default. You can reverse these schedules here.
  • Rev
    Select the schedule types for revision from the list provided:
    • P - Repayment of the various components.
    • I – Auto step-up
    • C - Commitment Reduction (Auto step-down)
    • D –Disbursement
    • R - Revision of interest rates for a loan with periodic interest rates
    The I (which increases the commitment amount during EOD, through value dated amendment on schedule date by schedule amount).
    For interest revision schedules, you have to provide the details only in the Start Date and Frequency fields subsequently. For a loan with an interest component that is defined with Floating Rate, applied periodically, at least one interest revision schedule should be defined.

    For information about Revolving/non Revolving types of commitments and reversal of commitment schedule details, refer to ‘Processing a Commitment’ chapter in this manual.

Capitalization Details

  • Interest Reserve Amount

    If Schedule Type is Normal, Payment Type is Bearing, and Capitalize option is selected, you can either enter or modify the Interest Reserve Amount as part of new contract creation or modification.

  • Interest Reserve Availability

    This value is defaulted based on the amount entered in Interest Reserve Amount on contract creation.

    Note:

    • When a loan contract is copied, the value of the Interest Reserve Amount, Interest Reserve Availability, and the Capitalize check box is not copied to the new contract created.
    • When a loan contract is split repriced, the value of the Interest Reserve Amount, Interest Reserve Availability, and the Capitalize check box is not copied to the child contract. You should manually unlock the child contract once it is created and enter the details.
    • While doing rollover, the value of the Interest Reserve Amount, Interest Reserve Availability, and the Capitalize check box is not copied to the child contract/new version. You should manually unlock the child contract/ new version of the rolled over contract once it is created and enter the details. Overdue schedules those with Capitalize check box selected gets capitalized by validating with Interest Reserve Availability.
    • When you unlock a loan contract with value Interest Reserve Amount and clear Capitalize check box, the values of Interest Reserve Amount and Interest Reserve Availability is retained with the existing value.
    During BOD/EOD, the system picks the main interest components and others components with Capitalize check box selected for auto capitalization.

    If there are any additional interest components present in the loan contract other than auto capitalization of interest allowed is cleared, then during BOD/EOD the system skips those additional interest components and picks only the main interest component and auto capitalization allowed checked components.

Parent topic: Setting Loan Schedule Preferences