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Many Banks and Financial Institutions use lending rates that are linked to the Base Lending Rates defined by the Central Bank of the country. Home Loans and other longer term loans are usually given out by banks/financial institutions at floating interest rates - where the interest rate applicable for the loan is linked to the interest rate set by the Central Bank and is periodically revised by the Central Bank. The interest rate applicable for the loan, can change during the tenure of the loan. The loan may start off as a 10% loan and may get revised to 10.5% after a period of time and can even be revised downwards (for example: 9.5%) depending on guidelines issued by the Central Bank from time-to-time.
Background and strategic fit
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Following additional attributes will be added to /mifosng-provider/api/v1/loanproducts list/add/update APIs
Field | Type | Definition | Restrictions |
isLinkedToFloatingInterestRates | boolean | Identifies a loan product is linked to floating rates | |
floatingRateId | long | Floating rates scheme to be followed | |
interestRateDifferential | decimal | Differential on top of rate as derived by Floating rate scheme "Loan Product Base Rate" is derived | |
minDifferentialLendingRate | decimal | Min differential w.r.t "Loan Product Base Rate" while providing loans | |
defaultDifferentialLendingRate | decimal | Default differential w.r.t "Loan Product Base Rate" while providing loans | |
maxDifferentialLendingRate | decimal | Default differential w.r.t "Loan Product Base Rate" while providing loans | |
isFloatingInterestRateCalculationAllowed | boolean | If true, loan can be given with floating interest If false, interest rate for the loan is fixed as per the rate derived as on loan application date |