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Event

Sequence No

Date

(dd/mm/yyyy)

Effective Date (for accounting)Comment

Debit

Credit

Disbursal

 

1

7-10-20137-10-2013 

Loan Portfolio (A)

Cash (A)

Automated System Accrual Event

2

7-11-2013

 

7-11-2013

A Repayment is Accrued/Recognized on the day it becomes due (both Interest and Fees/Penalties associated with the Repayment shall now be accrued).

The system event shall only kick in when it finds a repayment which is due for that particular day. In this scenario, it would only recognize the first repayment for this loan which is due on the 7th of November 2013.

The Accrual event does not kick in if

  • The interest, fees and penalty for the installment has already been paid ( We are now unlinking accruals and repayments)
  • The interest/fees and Penalty for the installment has been waived
  • The loan is not in an active state (pending transfer etc) ?



 

 

Receivable Interest (A)

Income from interest (I)

Receivable Fees (A)

Income from fees (I)

Receivable Penalties (A)

Income from penalties (I)

1st Installments repayment

3

7-11-2013



7-11-2013



Pays Principal, interest, fees and Penalties associated with this repayment 

Cash (A)

Receivable Interest (A)

Receivable Fees (A)

Receivable Penalties (A)
Loan Portfolio (A)
Prepayment for remaining Installments48-11-20138-11-2013

None of remaining Repayments are due yet, so the Interest/Fees/Penalties associated with them have not yet been recognized.

However, we use the same posting rules for repayments (and let accruals happen independently as per schedule)

Cash (A)Receivable Interest (A)

Receivable Fees (A)

Receivable Penalties (A)
Loan Portfolio (A)
Delete Previous Prepayment (with sequence Number 4)59-11-20138-11-2013

In case of deletion of a transaction, all accounting entries made for that transaction needs to be reversed.

For deleting (or even editing) an existing transaction, accounting books for that day should not be closed

Receivable Interest (A)Cash (A)
Receivable Fees (A)
Receivable Penalties (A)
Loan Portfolio (A)
Automated System Accrual Event67-12-20137-12-2013Identical to event 2 but recognizes the receivables for the second repayment which has become due today  
Write Off the rest off the Loan78-12-20138-12-2013

Unlike Cash based accounting which is affected only by Principal Write-off. Accrual Based accounts should respond to the following

  • Principal Write-off
  • Interest Write-off/Waiver (However, accounting entries are to be made only for that portion of the interest that has been recognized before the waiver)
  • Fee write off (However, accounting entries are to be made only for that those fees which have been recognized)

We should not allow a write-off before the last payment. Also, after the writeoff, we stop accruing interest/fees and Penalties

 







Losses Written Off (E)
Receivables Interest (A)
    Receivable Fees (A)
    Receivable Penalties (A)
    Loan Portfolio (A)
       
       

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