A.1.8 Index/Margin Rates
You can change the current Index Rate type (i.e. Prime Rate or Flat Rate) and increase or decrease or even replace the current Margin Rate of a variable rate Lease up to the required basis points using the INDEX / MARGIN RATE CHANGE monetary transaction. However, changing the depreciation rate or margin rate is supported only for Interest Rate type of lease calculation method.
Table A-20 To change an index/margin rate
| Transaction | Parameters |
|---|---|
| INDEX / MARGINRATE CHANGE | TXN DATE - Select the date from adjoining calendar. |
| INDEX - Select from the drop-down list as either Prime Rate or Flat Rate. | |
| MARGIN RATE - Specify the Margin Rate. | |
| REASON - Specify additional information (if any). | |
|
TXNS ADJUSTMENT TYPE - Select one of the following transaction adjustment type from the drop-down list: ACTUAL - Select this option to replace the existing Margin Rate with the current specified Margin Rate. INCREASE - Select this option to add the current specified Margin Rate to the existing Margin Rate. DECREASE - Select this option to reduce the current specified Margin Rate from the existing Margin Rate. However, note that reduction is permitted only up to existing Margin Rate and system displays an error if the current specified Margin Rate is greater than the existing Margin Rate. |
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AUTO POST CHANGE PAYMENT - Select either YES or NO from the drop-down list. If there is a change in Margin Rate and this option is selected as YES, then system automatically posts CHANGE PAYMENT AMOUNT transaction along with RATE CHANGE transactions on the account. Behavior of the CHANGE PAYMENT transaction follows the RATE CHANGE batch job behavior. If there is a change in Margin Rate and this option is selected as NO, then system posts only RATE CHANGE transactions on the account. However note that this indicator is applicable to accounts funded with products of type Interest Bearing Loans and Reschedule Method as Change Payment. |
On clicking Post system posts RESCHEDULE_INDEX monetary transaction to change the Index and Margin Rates. However, note that the Auto Post Change Payment transaction changes the payment amount only if the new calculated amount is greater than the old value.
For lease accounts, any rate changes (either variable rate or transaction posting rate) are controlled by the limits (values) defined for Payment Caps and Rate Cap & Adjustments in Setup > Lease Contract screen.
On successful posting of transaction, the counters in Account Details and Summary screen are updated. Also a letter of intimation is generated for correspondence by the scheduled batch LCSTXN_BJ_121_01 (LETTER FOR LEASE MONETARY TXNS) which consists of rescheduled lease contract terms indicating Transaction Date, old and new Index Rate, Margin Rate and Reason.
You can also reverse the rate change by posting Rate Change Reversal transaction and revert to old rate. If there are any payment(s) received before reversal, the same is adjusted to due buckets based on due amount. However, on reversal letter is not generated and has to be manually intimated.
Parent topic: Monetary Transactions