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Table of Contents

Savings Product Details

Panel

Savings Product Details:
Interest Rate - 10%
Interest Calculation - every 1 months
Interest Posting - every 3 months
Minimum Balance - 1000 (interest calculation is only applicable when 'average balance' or 'minimum balance' exceeds this value for given calculation period.

Info
titleSaving Product Details Explained

Interest Rate – The yearly rate at which interest shal shall be applied. (In mifos Mifos a year can be defined as 365 days or 360days in Accounting Rules configuration)

Interest Calculation Period – every 1 month on the end of the month with dates starting from start of financial year (always 1 Jan in mifosMifos)

Interest Posting – every 3 months on the end of the month with dates starting from start of financial year (always 1 Jan in mifosMifos)

Minimum Balance (for interest Calculation) – if the Average or Minimum Balance Principal for a given calculation period is greater or equal to Minimum Balance required then interest calculation is applicable.

...

Savings Account Created

Account Opened on 19 July 2010.

...

Info
titleSavings Account Activation Info

When an account goes active (for the first time) serveral several things happen.

  • account
activtion
  • activation date is set.
  • The next interest calculation date is determined - in this case as interest calculation occurs every 1 months on end of month, the valid set of interest calculation dates are highlight in the table below.
  • The next interest posting date is determined - in this case, occurs every 3 months on end of month, the valid set of interest posting dates highlighted below beside the possible interest calculation dates
  • It is only through interest posting that interest is actually compounded on the account.
  • Schedules are generated with mandatory/
recommened
  • recommend amounts to track payments by group/individual clients.
Possible Interest Calculation and Posting Dates

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Info
titleCalculation periods where first deposit occurs are handled is slightly special way.

Strictly speaking, the 'calculation period' is monthly so is from 1st of July to 31st of July 2010. However the account was only created on the 19th of July.

  • The 'average balance' is NOT calculated from the account creation date - 19 July 2010.
  • The 'average balance' is NOT calculated from the account activation date - 20 July 2010.
  • The 'average balance' is calculated from the first day of activity that results in a non-zero balance which is - 25 July 2010.
Info
titleAverage balance worked out for july

Given the average balance equation shown above:

Starting from 25th of July:

  • 25th of July to 31st July = 6 days duration (not including the 25th itself)
  • 25th of July to 31st July = 1000 balance for duration
  • P (July) = (1000 * (25 to 31 July) / (25 to 31 July) =(1000 * 6) / 6 = 1000 (since the P >= 1000, interest should be calculated)
  • r (July) = interest / 100 * (25 to 31 July) / (Number of Days in current financial year) = (10 / 100) * (6 / 365) = 6 / 3650
  • I (July) = P (r) = 1000 (6 / 3650) = 1.64 (rounding up to 2 decimal)

This interest is not posted (as its not due to be posted) but is instead stored in a interest to be posted column on savings_account. The next interest calculation date is upated to end of 1 month from last (Aug 31 2010) leaving the account looking like the following for July.

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The account at the start of october October looks like the following:

Date

Activity

Amount

Total Balance

Interest To Be Posted

Next Calculation Date

Next Posting Date

Note

01st October 2010

    0

    1012.74

    0

    31 October 2010

    31 December 2010

    balance brought forward from september September

    There is no activity in October except for an adjustment of a previous transaction. (At present mifos Mifos only allows adjustment of the very last transaction so we will adjust the withdrawal transaction). Instead of withdrawing 500 on 25th of September, it should of being Zero.

    So september September account really looks like this now:

    ...

    As a result Septembers closing balance and octobers Octobers opening balance should look like this:

    Date

    Activity

    Amount

    Total Balance

    Interest To Be Posted

    Next Calculation Date

    Next Posting Date

    Note

    31st September 2010

    Interest Calculated and posted

    8.22 + 12.74

    1020.96

    0

    31 October 2010

    31 December 2010

    interest posted

    01st October 2010

     

    0

    1020.96

    0

    31 October 2010

    31 December 2010

    balance brought forward from september September

    Savings Account Closed