Loan Defaults Based on Previous Loan Amount

Last Updated: Dec 15, aditi_rohitr.

Feature Summary

This feature would add fields in the loan product definition pipeline to allow a user to define different default, max, min loan amounts and number of installments based on any one of the following:

Current loan cycle number of the account owner
Last amount paid by the account owner

Current implementation allows users to specify min, max and default loan amounts and no. of installments which is same for all loan amounts. The new options will be in addition to this.

Background

Many MFIs increase the amount of loan a client can take based on either 1, the number of loans a client has taken (loan cycle per product) or 2, the amount of the previous loan. Although appropriate loan size can be determined offline by the loan officer, many MFIs want controls in the MIS system to more closely regulate loan size. Indeed, this is a specific requirement from Enda, our second beta partner.

Primary Flow

User clicks on "Define Loan Product"
On Loan Product Definition page, there are options to specify loan amount or # of Installments by loan cycle # or previous fully repaid loan amount of client. Option should be mutually exclusive.
By loan cycle number: For this option, user can specify the following for the current loan cycle number of the account owner: _ Loan max amount - for each loan cycle _ Loan min amount - for each loan cycle * Default amount - for each loan cycle
By last loan amount: For this option, user can specify the min, max and default values for the range of last loan amount paid by the account owner. User will have to specify the following: _ Last loan amount Range - a max of 6 ranges can be specified by the user. The first range will start with 0. When the user fills first end range, say 3000, then second row start range will be filled up with 3001 and so on. _ Loan max amount - for each range _ Loan min amount - for each range _ Default amount - for each range * Validation: ranges should not overlap.
Loan cycle numbers for which the user can specify the amounts or # of installments are- 0, 1, 2, 3, 4 and greater than 4.
Loan amount or # of installments field consider successfully repaid loans, not rescheduled loans. Applies just to quick cash loans in same product instance.

Note that previous loan can still have late payments and be considered successfully repaid.

Payday Loans AU

Other information

The min, max and default values can be modified from edit loan product. If this is done, it should be reflected in all the new loan accounts created after the change has been made. It will not affect the loan accounts already present.
The changes should be applied immediately. This is NOT a batch job.
The loan cycle to be considered is the product loan cycle.
When a new loan account is created for a customer, the system should display the min, max and default loan amounts as per the specifications above. All the validations will be as per these values.

Open Issues

What are restrictions/issues involved with editing loan definition? ANSWER: Changes apply to new loans. Either that, or when editing a loan, changes apply. This is a RARE case, so just need to build what's easiest.
What happens when Include in loan cycle counter is changed from No to yes and vice versa? ANSWER: Non-issue, since this is based on product cycle number.
Client loan account is Active in good standing. Loan cycle = 2. Meanwhile, another loan account is created in pending status. So it takes the min/max values as per loan cycle 2. Now the previous loan account is repaid completely, so the loan cycle = 3. Now the min/max values for the account in pending state may not be valid. Should the user be prompted to update the amounts? Similar case can happen when loan amount depends on previous loan that is fully repaid. Answer: YES, the user should be prompted to update the amounts. Note I'm not fully happy with how we're handling this scenario: This is the primary use case for Enda-- they create a loan account prior to the completion of the last loan so that it will be ready to be disbursed as soon as the last loan is repaid. We need to determine how we can better support that scenario? A solution for this scenario needs to be identified
Client has multiple loan accounts of same instance. The min and max amounts for these accounts will be same since they will refer to the same loan cycle. ANSWER: Yes.
Fee calculation can be based on Loan amount. So do we need to handle any issues there? ANSWER: This may be a requirement in the future, but no need to handle now.
For loan amount option, will all six lines be shown at the same time? If so, what is the basis of defining the range. Answer: Yes, all lines will be shown at the same time. The value of the start of the first range should be zero-- the rest will be user entered.
Can the option of "Calculate loan amount as" be modified from the "edit loan product" page?

Implementation submitted April 2007

An implementation was sent in in April of 2007. Jim Kingdon, between then and July 2007, looked at it and decided not to check it in because it has no tests. More minor problems are (1) copy-pasted code to deal with the 5 different rules, rather than an array or some such mechanism, (2) debugging print statements still in place, (3) a few little lines in the diff which don't seem to belong (probably due to not diffing against the exactly correct subversion revision).