This topic provides information on linking Covenant details for Collateral Category which are maintained in the Covenant Master Maintenance in covenant domain.

1. Click Next in the previous data segment to proceed with the next data segment, after successfully capturing the data.
   The Category Covenant Maintenance screen is displayed.

   Figure 3-2 Category Covenant Maintenance

   
   

   
   Description of "Figure 3-2 Category Covenant Maintenance"

   
   
2. Click icon.
   The Add Covenant screen displays.

   Figure 3-3 Add Covenant

   
   

   
   Description of "Figure 3-3 Add Covenant"

   
   

   For more information on fields, refer to the field description table.

   Table 3-7 Covenants - Field Description

   Field	Description
   Mandatory	Switch enable to include the covenant as mandatory. Switch disable to exclude the covenant as non - mandatory. This field gets defaulted from the Covenant Maintenance based on the selected Covenant Code.
   Covenant Code	Select the covenant code from the LOV. Active covenants maintained under covenant master maintenance of covenants domain are available for linking.
   Covenant Name	Displays the Covenant name based on the selected Covenant Code.
   Covenant Description	Displays the description based on the selected covenant code. Defaulted description can be modified.
   Covenant Reference Number	Specify the reference number for the covenant.
   Frequency	Select the frequency of covenant tracking. The available options are: Weekly Fortnightly Monthly Quarterly Half Yearly Yearly Custom Frequency of the specified covenant is defaulted here based on the details maintained at Covenant Maintenance screen. Defaulted frequency can be modified by user during linkage. Note: Frequencycanbe modified after save and authorization of the Category covenant record. You can modify the Frequency from a lower one (say – weekly) frequency to a higher one (say – Monthly) or vice- versa. All existing restrictions for frequency will continue to be there during the modification.
   Custom Days	Specify the custom days for the covenant. This field becomes available when Frequency is selected as Custom. For example, if the Frequency is defined as Custom and Custom Days is specified as 20, then frequency will be once in 20 days. Note: Custom days value can be minimum 1 to maximum 999. If you are modifying the frequency to CUSTOM post authorization of Collateral, you will also need to enter the custom days. All existing restrictions for custom days will continue to be there during the modification.
   Notice Days	Displays the number of days prior to revision date of the covenant gets defaulted from covenant maintenance. Notice days are mandatory when frequency is custom, fortnightly, weekly and above. Covenant is available for tracking during notice days period. Note: Notice days must be less than the Custom Days in case Custom Days is selected as Frequency. In case the Custom Days value is 1, the system does not allow to capture Notice days. Notice days can be a maximum of 30 days even if the Custom Days is more than 30 days. If Fortnightly is selected as Frequency, the notice days must be less than 14 days. NoticeDays canbe modified after save and authorization of the Collateral covenant record. TheNoticeDays can either be increased or reduced, and it will update the Notice date in turn. All existing restrictions for notice days will continue to be there during the modification.
   Grace Days	Displays the grace days maintained in the Covenant Maintenancescreen gets defaulted here based on the Covenant code selected. Note: Grace days must be less than the Custom Days in case Custom Days is selected as Frequency. In case the Custom Days value is 1, the system does not allow to capture Grace days. Grace Days can be a maximum of 30 days even if the Custom Days is more than 30 days. If Fortnightly is selected as Frequency, the grace days must be less than 14 days. GraceDays canbe modified after save and authorization of the Collateral covenant record. TheGraceDays can be increased or decreased, and it will update the tracking end date in turn. You are allowed to change a covenant's Gracedays during the covenant period – either before the review date or after the review date.
   Classification Type	This field gets defaulted from the Covenant Maintenance based on the selected Covenant Code. User can modify the same. The available options are: Internal External Covenants classified as Internal are monitored internally within the Banks/ Financial Institutions. Covenants classified as External are to be complied by the Customer.
   Linkage Type	This field gets defaulted as Facility, Collateral, or Customer based on the covenant selected.
   Covenant Sub Type	This field is applicable only for non-financial covenant types and is defaulted from Covenant Maintenance screen based on the selected Covenant. This is applicable for non-financial types. User cannot modify this.
   Covenant Type	This field gets defaulted from the Covenant Maintenance based on the selected Covenant Code. User cannot modify this. This field indicates the type of Covenant as Financial or Non Financial.
   Formula	This field specifies the Formula for computing the Covenant value. This field gets defaulted from covenant maintenance on selecting the covenant code with linked monitoring information. This is applicable for financial covenant.
   Covenant Target Condition	This field gets defaulted from covenant maintenance on selecting the covenant Code. Select the target condition for the covenant from the drop-down list. The options available are: Greater than or equal to Between Less than Greater than Equal to Less than or equal to Less than Note: Covenant Target Condition can be modified after save and authorization of the Collateral covenant record.
   Target Type	Target type configured for the covenant gets defaulted from covenant maintenance. Select the type from the drop-down list. The options available are: Value Percentage Ratio .
   Target from value	This field gets defaulted from covenant maintenance on selecting the covenant. Defaulted target value can be modified at the linkage level. When the covenant target condition selected is ‘Between’, then system populates two fields Targe Value 1 and Target Value 2 to enter from and to values to be considered for the covenant.
   Target to value	This field gets defaulted from covenant maintenance on selecting the covenant.
   Currency	Click the icon and select the currency for covenants from the list. This is mandatory only if Target type is selected as Amount.
   Remarks	Specify the remarks about the covenant details for collateral category maintenance.
   Monitoring Information Id	This field gets defaulted based on monitoring information maintenance of the selected covenant at the Covenant Maintenance level. This is applicable for financial covenants.
   Monitoring Information Description	Monitoring Information Description is defaulted based on monitoring information maintenance of the selected covenant at the Covenant Maintenance level. Note: If Between is selected as the Covenant Target Condition, the system derives the covenant compliance status as met only if covenant (value/percentage/ratio) is between specified Target from value and Target to value. Example: Covenant = Debt to Equity ratio Monitoring information = Balance sheet Formula = Total Liabilities / Total Equity Covenant Target condition = BETWEEN Target type = Ratio Target From Value = 1 Target To Value = 2 Currency – (LEFT BLANK) For the above case, the system expects the debt to equity ratio to be between 1 and 2. If Greater than is selected as Covenant Target Condition, the system derives the covenant compliance status as met only if covenant (value/percentage/ratio) is greater than the specified Target from value. Example: Covenant = Free Cash Flow Monitoring information for the covenant = Cash Flow Final Formula = Operating Cash Flow – Capital Expenditures Covenant Target condition = GREATER THAN Target type = VALUE Target From Value = 200000 Target To Value = (LEFT BLANK) Currency - USD For the above case, system expects cash flow to be greater than USD 200000. For more information about Covenant Maintenance, refer to Oracle Banking Covenant Maintenance User Guide.

3. Click Save to save the record.