Maintaining Financial Operation Tax

1.8.1.1 Maintaining Financial Operation Tax

Table 1-6 Financial Operation Tax

Field	Description
IOF Payment Method	You can either select Advance Payment, Capitalization from the drop-down list. By default, nothing is selected. If you have selected Advance Payment option, then IOF is collected upfront when loan is disbursed If you have selected Capitalization option, then IOF is capitalized along with the principal amount. Note: If IOF payment method is defined at the product level, then this option is not available at the contract level. IOF is applicable for Bearing, Discounted, and True discounted method of loans. IOF is applicable for Normal and Amortized schedule type of loans. IOF commutation scope for Discounted and True Discounted loan methods are limited to loans with bullet payment schedules. IOF is not recomputed or collected during any prepayment related activities.For example, normal prepayment, partial prepayment, pre-closure, and so on. IOF Advance Payment method is applicable for Bearing Normal, Bearing Amortized, Discounted and True Discounted. IOF Capitalization payment method is allowed only for Bearing Normal and Bearing Amortized Loans only.
Apply Book Rate for VAMI	If this check box is selected, then contract booking rate it taken instead of VAMI maintained rate. For more information about Financial Operation Tax, refer to Bilateral Loans User Manual.

Field

Description

IOF Payment Method

You can either select Advance Payment, Capitalization from the drop-down list. By default, nothing is selected.

If you have selected Advance Payment option, then IOF is collected upfront when loan is disbursed

If you have selected Capitalization option, then IOF is capitalized along with the principal amount.

Note:

If IOF payment method is defined at the product level, then this option is not available at the contract level.
IOF is applicable for Bearing, Discounted, and True discounted method of loans.
IOF is applicable for Normal and Amortized schedule type of loans.
IOF commutation scope for Discounted and True Discounted loan methods are limited to loans with bullet payment schedules.
IOF is not recomputed or collected during any prepayment related activities.For example, normal prepayment, partial prepayment, pre-closure, and so on.
IOF Advance Payment method is applicable for Bearing Normal, Bearing Amortized, Discounted and True Discounted.
IOF Capitalization payment method is allowed only for Bearing Normal and Bearing Amortized Loans only.

Apply Book Rate for VAMI

If this check box is selected, then contract booking rate it taken instead of VAMI maintained rate.

For more information about Financial Operation Tax, refer to Bilateral Loans User Manual.

Parent topic: Specifying Product Preferences