...
Event | Debit | Credit |
Disbursal | Loan Portfolio | Cash |
Interest Applied | Receivables Interest | Interest on loans |
Fee Applied | Receivables fee | Income from fees |
Penalty Applied | Receivables penalties | Income from Penalties |
Principal repayment | Cash | Loan Portfolio |
Interest repayment | Cash | Receivables Interest |
Principal Write off | Losses Written Off | Loan Portfolio |
Fees payment | Cash | Receivables fee |
Penalty payment | Cash | Receivables penalties |
Interest write off | Losses Written Off | Receivables Interest |
Fee write off | Losses Written Off | Receivables fee |
Penalty write off | Losses Written Off | Receivables penalties |
Example:Flat Loan type
Loan Amount: $ 12000
Interest Rate: 12%
Disbursement Date: 15-10-2012
Repayment Start-Date: 15-11-2012
Event: Loan Disbursement
Payment mode: Cash
Date: 15-10-2012
Account Description | Dr | Cr |
Cash Book |
| 12000 |
Loans & Advances Short Term Loan | 12000 |
|
Event: Month-end Accrued Interest Posting. This job posts the Accrued Interest posting to Interest Receivable control accounts on last day of every month.
Mode: Automated process or Manually Invoked process which computes the interest receivables from respective members and post the Journal Voucher to Financial accounting
Date: 31-10-2012
Account Description | Dr | Cr |
Interest Receivables | 120 |
|
Interest on Loans |
| 120 |
Event: Repayments done
Payment mode: Cash
Date: 15-11-2012
...
Account Description
...
Dr
...
Cr
...
Cash on Hand
...
1120
...
...
Loans & Advances Short Term Loan
...
...
1000
...
Interest Receivables
...
...
4.2.3 Examples
4.2.3.1 Flat Interest Type
When Interest Type is flat, prepayment does not write off any interest. The entire interest is recognized and “receivable” as soon as the loan is disbursed.
The entire interest (for complete duration of the loan) is recognized immediately after disbursal
There are quite a few conflicting views on if this special treatment is required. However, leaving it in here for now till we get feedback from a few accountants
The sample loan shown here follows a monthly repayment cycle
Event | Debit | Credit |
Disbursal (7-10-2012) | Portfolio Control Account (1) | Fund (1) |
Interest Receivable (2) | Income from interest (2) | |
Apply Fee (7-10-2012) | Fees Receivable(3) | Income from fees (3) |
Principal, Interest and Fee Repayment(1) (7-11-2012) |
Fund (4) | Interest Receivable (4) |
Portfolio Control Account (4) | ||
Fees Receivable(4) | ||
Prepayment for next n-1 Instalments (excluding part of last principal) (8-11-2012) |
Fund (5) | Interest Receivable (5) |
Portfolio Control Account(5) | ||
Prepayment of remaining Principal (17-11-2012) | Fund (6) | Portfolio Control Account(6) |
*Note: A Batch Id is shown in Brackets
4.2.3.1 Declining Interest Type
In the case of Declining Balance, we have loans involving interest recalculation. The interest is accrued at the date of each repayment.
The system needs to have a job for posting the same
Event | Debit | Credit |
Disbursal (7-10-2012) | Portfolio Control Account (1) | Fund (1) |
Automated System Event (when an Interest repayment becomes due) (7-11-2012) | Interest Receivable (2) | Income from interest (2) |
Principal, Interest Repayment(1st Installment) (7-11-2012) | Fund (3) | Interest Receivable (3) |
Portfolio Control Account (3) | ||
Prepayment for remaining Instalment’s (no interest accrued) (7-11-2012) | Fund (4)
| Portfolio Control Account(4) |
Note: If any interest is accrued till date while doing a prepayment, the application should automatically log a system generated journal entry
for recognizing the same while doing a prepayment.
5 Closure Dates
Allow setting closure dates at branch level after which accounting transactions cannot be posted.
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| Column Name | Data Type | Description |
|---|---|---|
| id | int | |
| gl_code | varchar(45) | |
| category | varchar(45) | Whether the account falls under “asset”, “income”, “expense”, “liability” or “equity” |
| parent_Id | int | References “id” of table “m_acc_coa”. For enabling a hierarchical COA |
| name | varchar(45) | |
| type | varchar(45) | Either “header” or “detail” account. Header accounts will not have transactions logged against them |
| description | varchar(500) |
7.2 Modifications to Loan Product (“m_product_loan”)
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