Details

Type: Improvement

Status: Ready for Showcase

Priority: Blocker

Resolution: Fixed

Affects Version/s: None

Fix Version/s: Margaret H, 2.3.2

Component/s: None

Implementation Priority:Must

Team:Core
Description
There is a need to have an option to do a "monthly interest calculation". Detailed requirement and example below:
There are 2 loans (with monthly installments) which are handled as follows in reallife:
Loan 1:
February2011  Disbursed  10,00,000 at 2% per month
March2011  Interest paid  20,000
April2011  Interest paid  20,000
May2011  Loan repaid paid with interest  10,20,000
I schedule this as a loan product with interest type as "diminishing balance" and with 2 "principalonly grace" periods. This works fine in Mifos.
Loan 2: Is similar, except that the customer does some prepayments.
May2011  New Loan disbursed  40,00,000 at 2% per month
June2011  Interest paid  80,000
July2011  Interest paid  80,000
August2011  Interest paid  80,000, Principal repaid 5,00,000 (principal outstanding is now 35,00,000)
September2011  Interest paid  70,000, Principal repaid 10,00,000 (principal outstanding is now 25,00,000)
October2011  Interest paid  50,000, Principal repaid 15,00,000 (principal outstanding is now 10,00,000)
Nov2011  Interest paid  20,000
I am not able to configure Loan2 in Mifos. Ideally, the prepayments should be adjusted to the principal. But mifos accounts prepayments against future interest, if I use interest type as "diminishing balance".
If I use the interest type as "diminishing balance with interest recalculation", Mifos computes the interest based on dailyreducing balance. So the interest due for Feb, will be less than interest due for April. Which will not help implementing the above scenario. And with this type of interest, Grace periods are not supported. So it is impossible to implement such a loan in Mifos.
Mifos should be enhanced and Principal Prepayment option for "Declining Balance" and "Declinging Balance  Equal Principal Installment" interest types should be added.
The following remarks should be implemented:
a) The "Principal Repayment" link should be visible only for "Declining Balance" and "Declinging Balance  Equal Principal Installment" interest types (this does not make sense for both "flat" and "declining balance with interest recalculation" interest types)
b) We need to handle the situation where user applies a payment for interest on a date and then on the same date does a "Principal Repayment" too.
c) We need to handle the situation where principalrepayment is done on a nonmeeting date (i.e. on a date on which there is no entry in the loan_schedule table).
d) We need to handle the situation where for a six month loan, only interest was paid for 8 months and then the principal was repaid. I.e. the duration of the loan went beyond what was entered into loan_schedule table by Mifos.
e) View all account activity should show entry for "Principal Repayments"
Attachments
Issue links
 is related to

MIFOS2X5556 Past transaction adjustments do not work properly with principal prepayments
 Open