A charge or fee is a payment that you levy on your customer in exchange for advices or services rendered by your bank. Banks charge nominal fees for various services, such as courier charges, SWIFT charges. Bank charges generally constitute a major portion of revenue for the bank. These type of charges are associated with almost all the activities of the bank. For instance, when a bank accepts corporate deposits, it may also recover pre-closure charges or pre-payment penalty on the deposit.

Apart from charges, bank collects fees also. For example, if there are any legal proceedings for any reason, banks will debit the fees associated with this to the customer.

While setting up a product in Oracle Banking Trade Finance Cloud Service, attributes for charge/fees collection also have to be set up.

In Oracle Banking Trade Finance Cloud Service, you can define the different types of charges or fees that apply on a product as ‘classes’. A charge class is a specific type of charge component (E.g. ‘Charges for amending the terms of a contract’).

A charge class is like a template, which can be associated with a product. You can modify certain parameters of the charge class while associating it with a product and also at the time of contract processing.

When defining a product, you merely have to attach the required classes. In this manner, a contract processed under a particular product acquires the classes (components) associated with the product.

However for Funds Transfer and Foreign Exchange modules, Oracle Banking Trade Finance Cloud Service will not use charge classes for calculating charges. You need to link a charge rule while defining the charge component for the product. The linking of a charge rule to a product is discussed in the subsequent sections of this chapter.

To apply a charge or fee on a Funds Transfer, you should first define attributes for each of the components. You can define these attributes by specifying a Rule for the charge or fee. These charge rules should in turn be linked to a product through a class, so that the attributes of the charge rule will be applied on all contracts linked to the product. However, while capturing the details of a contract, you can modify some of the attributes defined for a rule. Further, for a contract, you can also indicate whether the application of a specific charge component should be waived.

You cannot modify the attributes of the rule during contract input. However, you can change the charge amount.

More than one charge or fee can be applied on a product. For example, you could link two charges to an outgoing transfer product, one with 0.05% of the transfer amount as the charge and another with a flat amount of say 200 local currency units. The first one could be your commission on the transfer and the second, for the SWIFT or cable charges incurred to affect the transfer. These will be processed as two different charge components. The income accounts can be different for these components. The two charge components will be reported in all reports and in the customer correspondence regarding the transfer.