1. Bilateral Loans
  2. Defining Attributes Specific to Loan product
  3. Setting Product Preferences
  4. Identifying Products for Agency Contract Creation
  5. Specifying Installment Schedules

3.2.17.1 Specifying Installment Schedules

Specifying if Installment Schedules should be Allowed

Your bank may need to define a flexible repayment schedule for some customers who avail loans. The customer may need to repay fixed amounts on certain schedules, which you must adjust towards both interest and principal.

For such customers, for a loan contract with payment method as bearing, and normal schedules, you can define installment schedules. The amount repaid on the due date of an installment schedule is considered as inclusive of interest computed on the main component.

It is possible to have more than one installment schedule for a contract.
To define installment schedules, you must:
  • Specify installment schedules as allowable, for the product in the Installment Preferences screen. Select the Allow Installment option. When you do this, for any loan contract involving the product, you can define installment schedules.
  • When you enter a loan contract using the product for which installment schedules are allowable, in the Contract Schedules screen, select Installment as the component, and specify the fixed amount being repaid. The interest payable on the main component is computed and deducted from the fixed amount, and the remaining portion is appropriated towards repayment of principal.

Specify the User ID and Password, and login to Homepage.

From the Homepage, navigate to Bilateral Loans Product Definition screen.

From the Bilateral Loans Product Definition screen, click Preferences.

  1. From the Preferences screen, click Installment Details tab.
    The Installment Preferences screen is displayed.

    Figure 3-8 Installment Preferences


    Description of Figure 3-8 follows
    Description of "Figure 3-8 Installment Preferences"

  2. An example of a contract with installment schedules is shown below:

    Example

    The calculation of amounts due for principal and interest for main component is explained below with an example.

    You have issued a loan to one of your customers, with a Value Date of 1st January 2003, which matures on 1st November 2003. The amount of the loan is 10,000 USD, the interest being charged at 10.00%, calculated on Actual / 360 basis.

    Schedules for principal and interest on the loan are shown in the table below. The customer has requested you to define monthly fixed amount schedules from 1st May 2003 to 1st July 2003, and also between 1st September 2003 and 1st November 2003, when the loan matures.

    Table 3-12 Installment Schedules

    Component Start Date Number of schedules Frequency Amount
    PRINCIPAL 01-FEB-2003 3 Monthly 500.00
    INTEREST 01-FEB-2003 3 Monthly -
    INSTALLMENT 01-MAY-2003 2 Monthly 1,000.00
    PRINCIPAL 01-JUL-2003 1 Daily 1,000.00
    INTEREST 01-AUG-2003 1 Daily -
    INSTALLMENT 01-SEP-2003 2 Monthly 1,500.00
    PRINCIPAL 01-NOV-2003 1 Bullet -
    INTEREST 01-NOV-2003 1 Bullet -
    For each schedule due date, the amount due for the interest and principal components, as computed by the system, are shown below (the installment schedules are marked):

    Table 3-13 Schedule

    Schedule Component Due Date Amount
    - INTEREST 01-Feb-2003 86.11
    - PRINCIPAL 01-Feb-2003 500.00
    - INTEREST 01-Mar-2003 73.89
    - PRINCIPAL 01-Mar-2003 500.00
    - INTEREST 01-Apr-2003 77.50
    - PRINCIPAL 01-Apr-2003 500.00
    Installment INTEREST 01-May-2003 70.83
    - PRINCIPAL 01-May-2003 929.17
    Installment INTEREST 01-Jun-2003 65.19
    - PRINCIPAL 01-Jun-2003 934.81
    - PRINCIPAL 01-Jul-2003 1,000.00
    - INTEREST 01-Aug-2003 103.83
    Installment INTEREST 01-Sep-2003 48.53
    - PRINCIPAL 01-Sep-2003 1,451.47
    Installment INTEREST 01-Oct-2003 34.87
    - PRINCIPAL 01-Oct-2003 1,465.13
    - INTEREST 01-Nov-2003 23.42
    - PRINCIPAL 01-Nov-2003 2,719.42
    For the installment schedules, the amount repaid is adjusted towards interest and principal.
    Details of the calculation of interest on the various due dates, based on the principal being repaid are shown below:
    Due Date Start Date End Date Days Basis Amount Interest
    01-Feb-2001 01-Jan-2001 01-Feb-2001 31 10,000.00 86.11
    01-Mar-2001 01-Feb-2001 01-Mar-2001 28 9,500.00 73.89
    01-Apr-2001 01-Mar-2001 01-Apr-2001 31 9,000.00 77.50
    01-May-2001 01-Apr-2001 01-May-2001 30 8,500.00 70.83
    01-Jun-2001 01-May-2001 01-Jun-2001 31 7,570.83 65.19
    01-Jul-2001 01-Jun-2001 01-Jul-2001 30 6,636.02 55.30
    01-Aug-2001 01-Jul-2001 01-Aug-2001 31 5,636.02 48.53
    01-Sep-2001 01-Aug-2001 01-Sep-2001 31 5,636.02 48.53
    01-Oct-2001 01-Sep-2001 01-Oct-2001 30 4,184.55 34.87
    01-Nov-2001 01-Oct-2001 01-Nov-2001 31 2,719.42 23.42

Parent topic: Identifying Products for Agency Contract Creation