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When repayments are on time and for the exact due amount always, then there is usually no need for interest recalculation.
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- is paid Late
- is paid Early
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b) Only part of the Due Amount is paid and:
- is paid On Time
- is paid Late
- is paid Early
c) Excess of Due Amount is paid and:
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c) Rest or Frequency at which outstanding principal is recalculated – may be daily, weekly, fortnightly or monthly
At the end of every business day a batch job (Loan Interest Recalculation) will kick off which will check all active accounts for which interest recalculation is set to "true". The job then checks if there the interest calculated vs interest specified in repayment schedule matches. If yes,
Background and strategic fit
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| Attribute | Description | Notes |
|---|---|---|
| Days In Year | Number of days to be considered for a year when calculating interest. Can be: Actual 365 360 364 | Not Null Default is "Actual" |
| Recalculate Interest? | For this loan product, if interest is to be recalculated when early or late payments or exact amount is not paid (True or false) | Checkbox – Nullable Default is Null |
| Frequency at which Outstanding Principal is recalculated | Rest or Frequency at which outstanding principal is recalculated – Same as Repayment FrequencyllFrequency Daily Weekly Fortnightly Monthly | Dropdown - Nullable Default is Null |
| Days Calculation Basis | Basis for calculation of number of days between the start and end dates Actual 30 | Default is Actual |
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- Loan Products to be enhanced to capture above 4 attributes
- Loan Accounts to be enhanced to capture above 4 attributes
- When make payment screen is submitted – then system checks if the payment was on time and was for the exact amount. If not, then the current and future installment and interests are re-calculated for the loan as described in Business Rules.
- New Batch job to be introduced for Daily Interest Amount Calculation for Loans
New Screens
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New Screen will capture "Principal Pre-payment" details. This screen will be similar to "Make Repayment" screen. This screen will used to make a pre-payment on principal.
Fields to be captured:
- Transaction Date
- Principal Prepayment Amount
- Principal Outstanding (Read-only field)
- Interest Outstanding (Read-only field)
- Payment Type
- Payment Details
- Notes
This button will be enabled only for products where "Recalculate Interest?" is set to "true". The future interest is recalculated and repayment schedule is regenerated with revised interest and principal repayments when this screen is submitted. A preview needs to be shown with revised repayment schedule before this screen is submitted.
The older version of the repayment schedule needs to be saved so that it can be viewed, when needed.
Changes to Existing Screens
- Loan Products screens to be enhanced to capture above 4 attributes
- Loan Accounts screens to be enhanced to capture above 4 attributes
- Loan Account screen to be enhanced to have a new "Principal Pre-payment" button
- Make Payment Screen – interest amount calculation and application of principal changes (see Business Rules for calculations)
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New Batch job to be introduced for “Interest Re-Calculation for Loans” – For all loans with overdue repayments, the current and future installment and interests are re-calculated for the loan as described in Business Rules.
This batch job will select
a) all loans for which "Recalculate Interest?" is set to true and where either a transaction has happened or a repayment is due on the current date - for such loans
b) all loans which are past their last repayment date and still there is principal outstanding. The job will calculate daily interest for outstanding principal and will keep adding daily interest to thee interest portion of the last installment.
- To be verified: If “Loan Summary” job needs to be modified
- To be verified: If “Update Loan Arrears Aging” job needs to be modified
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