FIFO and LIFO

Select this check box to retain the payment schedule on the basis of LIFO and FIFO if prepayment is done on loan contract. If prepayment is done on a loan contract, then the schedule is rebuilt on the basis of FIFO and LIFO logic.

• FIFO - Select this option to rebuild the schedule on the basis of FIFO logic.

  Example

  Say that a loan contract is booked on a monthly and bullet frequency with schedules 11 and 1 respectively. Consider that the principal amount is USD 12000000, the value date is 01 March 2005 and the maturity date is 01 March 2006. This is shown in the table below:

  Start Date	Component	Frequency	No Of Schedules	Unit	Amount
  1 April 2005	Interest	Monthly	11	1
  1 April 2005	Principal	Monthly	11	1	1000000
  1 March 2006	Interest	Bullet	1	1
  1 March 2006	Principal	Bullet	1	1	1000000

  If you select the Prepayment Schedule as FIFO, then during prepayment made on 15 April 2005 for USD1600000 the schedules are built as given below

  Start Date	Component	Frequency	No Of Schedules	Unit	Amount
  1 April 2005	Interest	Monthly	11	1
  1 April 2005	Principal	Monthly	1	1	1000000
  15 April 2005	Principal	Monthly	1	1	1600000
  1 June 2005	Principal	Monthly	1	1	400000
  1 July 05	Principal	Monthly	8	1	1000000
  1 March 2006	Interest	Bullet	1	1
  1 March 2006	Principal	Bullet	1	1	1000000

• LIFO - Select this option to rebuild the schedule on the basis of LIFO logic.

  Example

  Let us consider the same example as above and if LIFO is selected during the payment made on 15 April 2005, the schedules are built as given below:

  Start Date	Component	Frequency	No Of Schedules	Unit	Amount
  1 April 2005	Interest	Monthly	11	1
  1 April 2005	Principal	Monthly	1	1	1000000
  15 April 2005	Principal	Monthly	1	1	1600000
  1 May 2005	Principal	Monthly	9	1	1000000
  1 February 2006	Principal	Monthly	1	1	400000
  1 March 2006	Interest	Bullet	1	1
  1 March 2006	Principal	Bullet	1	1	0

Prorata

Select this option if you want prorata as a payment schedule processing for a product.

In prorata, schedules and tenor remain does not change and the outstanding balance is equally calculated on total number schedules. The prorata amount is calculated based on the below calcualtion.

Prorata amount = Outstanding principal amount after prepayment/ Number of contract schedules in amount due for principal component after value date.

Example

Let us consider the below example of schedule details for a back date contract during loan booking.

• Loan amount - 120,000.00
• Value date - 2015-06-01
• Loan booking date - 2015-07-21
• Maturity date - 2016-07-20

Schedule details after prepayment:

Retain Payment Schedule Frequency

If you have selected this option at the product level, the schedule frequency is retained as is. That is, you cannot change the schedule frequency from daily to monthly, monthly to quarterly, quarterly to half-yearly and so on.

Reduce Tenor

This option is applicable only if the pre-payment schedule is selected as LIFO with Reduce Tenor. If you select Reduce Tenor option at product level, the maturity date of a loan is automatically calculated based on the Amount Due value.

The system calculates maximum due date as maturity date for non-zero amount due.

The following table shows the maturity date changes for pre-payment schedule.

• 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.