Every financial institution, irrespective of its nature, will have a charter of what they are and are not permitted to do, depending on the geographies or countries they are registered in or intend to operate. Further, the contents of the charter will change as per the constitution of the financial institution – a bank and a non-banking financial institution, though both are in the business of lending – have their own rules and boundaries to follow.

The purpose of the lending policy parameter is to help summarize all such policy parameters and define them upfront. The products of the financial institution and their features are subject to the said parameters and cannot act in violation.

Example: The field "Backdating Allowed Within (Days)” determines how far back a transaction or adjustment can be recorded. This could align with a lending policy parameter stating that loan modifications or repayments can only be backdated within this period and this could change from country to country and bank to bank.

The purpose of this maintenance is to define the manner in which the financial institution would like to have accounts numbers generated. Retail lending offers multiple parameters that can be pre-configured for auto number generation.

The purpose of this maintenance is to define business components in the form of Principal, Interest, and Fees. Business components are a source of revenue to the lender. The said maintenance also facilitates definition of ancillary aspects like method of computation, basis of computation, accrual processing, and collection process for interest and fee related business components.

Example: Fee can be Flat Amount, Percentage of Principal - should it be event based/Ad-hoc/set frequency etc..

The purpose of Asset Classification Plan is to define the methodology of monitoring the loan accounts financial health. While non-payments is the driving force, the range of non-payments can be further explained with the combination of asset codes and its severity. The more the delay in making payments as expected, worse is the asset code and its related severity.

The financial institution can define a health matrix as explained above so as to have an accurate picture of the accounts credit worthiness. The credit worthiness is then presented in the form of an asset status code. Further, the institution can also decide to tag an account as delinquent or non-performing. This also facilitates transfer of balances from one ledger to another as and when the asset codes move from one status to another.

The purpose of a Product Segment is to define segment-specific features as per the policies laid down by the financial institution. The segment facilitates defining the broad boundaries within which various segments with respect to Secured Personal Loans, Unsecured Personal Loans, and Home Loans are expected to operate.

The product segment is a summary of parameters that are driven by the financial institutions internal policy mandates and the arena within which they are bound to operate. Business components, Life-cycle related internal parameters, Delinquency/Asset related processing, Provisions, Accounting heads and ledgers, and events and accounting are some of the broad definitions that encompass a lending product segment.

The purpose of Product definition is to define business variations, as applicable, under the respective product segment, as illustrated above. While the product segment is all about the financial institutions internal policies, the product definition helps define aspects that are very specific to the target business. Business Components, Life-cycle related borrower parameters, Restrictions, and Repayment stages are some of the broad definitions that encompass a lending product definition.

Account onboarding involves loan account creation and disbursement as per a combination of Product attributes and Product Segment derivations. Repayment stages can be defined as per a combination of regular periodic installments, moratorium and Interest-only stages.

Fees can be collected during the disbursement event as per the components and related linkage to the respective Product Segment.

Account creation with a value dated effect is supported subject to the parameters defined in the lending policy.

Automatic repayments can be configured as per the account repayment frequency. Instructions can be maintained at an account level for the funds to be collected from a saving account or the payment network as per the borrower convenience.

Accounts can be disbursed in full during onboarding or in a phased manner, as required. Requests can be placed upfront for automatic phased disbursements. Disbursements can also be initiated manually.

Account repayment involves regular installment payments, partial payments and account closures. Partial payments provide options to the user to decide on the re-computation basis for deriving a fresh repayment schedule. The Product configurations help default a specific re-computation basis.

Fees can be collected during the prepayment event as per the components and related linkage to the respective Product Segment.

Repayment Date Change - The due-date for a loan account can be modified based on a request from the borrower. Fees can be collected during the amendment event as per the components and related linkage to the respective Product Segment.

Interest Rate Change - The interest rate for a loan account can be modified based on a request from the borrower. Fees can be collected during the amendment event as per the components and related linkage to the respective Product Segment.

Tenure and Installment Change - The tenure or installment for a loan account can be modified based on a request from the borrower. Fees can be collected during the amendment event as per the components and related linkage to the respective Product Segment.

Non-Financial amendments in the form of replacing an old repayment account or repayment mode can be carried out based on the borrower’s request.

Account statements can be generated for a specific account, as per the required date range based on borrower’s request. Bills can be sent to the borrower as per the configuration defined at the Product.

Accounts can be levied with adhoc charges as per the service availed by them. The amount levied is as determined by the user while the fee collection is as per the components and related linkage to the respective Product Segment.

Accounts can be levied with periodic fees during onboarding. The levy is on a monthly basis and the fee collection is as per the components and related linkage to the respective Product Segment.

Fees levied can be modified so as to reduce the amount or waive them in entirety, based on borrower’s request. The said transaction is applicable for event as well as periodic fees, subject to component definition and related linkage to the respective Product Segment.

Hardship programmes can be defined in order to assist borrowers in distress. Such programmes can either be initiated by the lender based on exigencies or can be put in place based on specific requests from borrowers. Repayment holiday, fee waivers, halt on delinquency processing are some aspects of hardship programmes.

Loan accounts can be categorized as per their asset quality thus providing an effective tool to the lender in ascertaining quality of its overall portfolio. The determination of account level asset status is as per the configurations defined at the segment and related parameters enabled in the lending policy. The configuration enables forward and reverse movements, balance transfers and accrual based accounting.

Loan accounts can be provisioned for, across components. Provisions are computed at a pre-configured interval and adjusted as per the events occurring in the account’s life-cycle.

Balance Inquiry - Balances for a loan account can be viewed upon using balance inquiry. Balance Inquiry provides a detailed view of the account balances by breaking down the dues component-wise.

Schedule Inquiry - The user can access the repayment schedule for a loan account that provides a detailed view on the repayment dates, installment amount with a break-up of the installment constituents in the form of Principal and Interest.

Transaction Inquiry - Transactions that take place in a loan account can be inquired upon using the transaction inquiry. The user has multiple search options in order to narrow down his search to a specific transaction, if required. The inquiry also provides detailed insights in the accounting treatment provided to the transaction in question along with the other related details.

In addition to the transaction inquiry, users can view additional transaction details in the Transaction View and Reversal option. In addition to the information displayed specific to the said transaction, this option also provides audit details for the users to have a comprehensive look. Further, the same option allows the user to reverse the transaction, if reversal for the said transaction is supported and as per parameters defined in the lending policy

Financial protection is provided to the active duty service members in terms of a reduced interest rate for a loan account/s wherein the loan account was created prior to becoming a service member.

Financial protection is provided to the members of the military community wherein the service member will not be charged anything beyond a certain specified percentage, also known as the Annual Percentage Rate.

Lenders can provide clear and accurate disclosures amount interest rates, fees and related terms of credit.

Standardized structured format for reporting credit information across the bank, making it easier for credit bureaus to process the same and interpret.