Advance & underpayment scenarios for DecBalance Int type

Description

One of our customer is using Declining Balance Interest type component. Most of the members are paying principal amount in advance or under payments, mifos is adjusting the advance payment to future installments proportionately for principal and interest as per the original loan schedule.
Since customer is paying principal amount in advance, mifos should adjust the amount to principal component and recalculate interest for future installments based on the principal outstanding. This has led to major operational issues at customer.

Please note: Interest type cannot be changed to EMI-interest recalculate as our customer business does not demand this product component.

Please find attached example for your reference.

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hugotechnologies
October 25, 2012, 6:08 AM

Dear kasia

Hope you are testing with Interest Type as “DecliningBalance-EqualPrincipalInstallment" and OverdueInterestPaidFirst=true in config file.

Also note that, interest will be recalculated for subsequent installments when paid in advance.
Similarly, when customer pays more than the installment amount the paid amount gets updated to the current principal + Interest and balance towards principal only for the subsequent installments and interest gets recalculated for the future installments.
We tested this and working absolutely fine.
If possible please be online on skype to discuss in detail.

skype: hugo.technologies

Thanks
Shiva

Kasia Piecielska
October 26, 2012, 12:48 PM
Edited

Dear Shiva,

I set all options as you said RecalculateInterest=1 in config_key_value table, and OverdueInterestPaidFirst=true in config file.

I am using DecliningBalance-EqualPrincipalInstallment loan. There are a few problems that I found for this issue:

Repro:
1. Create DecliningBalance-EqualPrincipalInstallment loan account - amount 2000, interest 20%, frequency of installment 1 week
2. Edit account status to approved and disburse loan.
3. Apply payment of 200. First installment should be paid, the rest goes to second installment.
In result first principal was paid, but interest for first and second installments were not. Amount of interest for first installment decreased, but for second increased.
Please see payment200.jpg file. There is repayment schedule and original schedule for account.

4. Then apply payment of 266,5, so first, second and third installments will be paid.
See payment266,5.jpg file - these installments were not paid off. Interests are recalculated, but still not repaid.

After applying this 2 payments, I cannot see on Repayment schedule what was already paid - no installments are fully repaid.

5. Apply payment of 1330. See payment1330.jpg file. After this payment, I have to repay the last installment and still all interest.

6. Repay loan. When I wanted to repay loan, I only should pay 3, which is equal to first interest.
See repayloan.jpg file. In result account is closed, but not everything was paid.

OverdueInterestPaidFirst is working with all types of loans so if I disable this option than I cannot use you changes.

Kasia

praveenkumar janagam
October 29, 2012, 8:04 AM
Edited

Dear kasia,

I have seen your screen shots. and understood what you have done
Please go through the screen shots I have attached
The file contains
Under-Payment & Advance-paymenst screen shots
Testcase for Monthly Frequence Type

skype: praveenkumar.janagam

hugotechnologies
October 29, 2012, 8:32 AM

Dear Kasia

Please follow the steps attached with the jira issue and do the testing as illustrated. Let us know for any issues.

Thanks

Shiva

From: praveenkumar janagam (JIRA) jira@mifosforge.jira.com
Sent: 29 October 2012 13:51
To: info@hugotechnologies.com
Subject: [JIRA] () Advance & underpayment scenarios for DecBalance Int type

<https://mifosforge.jira.com/s/en_USacb2gh-418945332/809/274/_/jira-logo-scaled.png>

<https://mifosforge.jira.com/secure/ViewProfile.jspa?name=praveenkumar.janagam> praveenkumar janagam edited a comment on Bug <https://mifosforge.jira.com/images/icons/bug.gif> <https://mifosforge.jira.com/browse/MIFOS-5731>

<https://mifosforge.jira.com/browse/MIFOS-5731> Advance & underpayment scenarios for DecBalance Int type

Dear kasia,

I have seen your screen shots. and understood what you have done
Please go through the screen shots I have attached
The file contains
Under-Payment & Advance-paymenst screen shots
Testcase for Monthly Frequence Type

skype: praveenkumar.janagam

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Kasia Piecielska
October 30, 2012, 8:47 AM

Hi Shiva,

I followed your instructions.
Unfortunately neither underpayment, nor advance payment do not work as on your screen shots.
Everything was set as you said. See attached file mifos-5731.zip
Underpayment repro:
Loan disburse 02.08.12
3 Installments due
One payment of 1000.
Result on screen shot - undepayment.jpg
Advance Payment repro:
Loan disburse 02.08.12
Apply payment of 2000, than again of 2000.
Result on screen shot - advance_payment.jpg

As I wrote previously, there is a problem with repaying a loan - I can repay loan with Declining Balance Equal Principal Installment without paying all interests.

Also I want once again draw your attention to OverdueInterestPaidFirst feature. What about officers who want to use other types of loans without Overdue Interest paid first option on?

Thanks,
Kasia

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