Product Definitions

Introduction

A product is a financial offering by an MFI to its clients:

Product Type. Mifos supports the following two product types: loans and savings. An MFI can offer loans to clients or groups with active accounts. It can offer savings accounts to client, groups, and centers.
Categories. An MFI can define product categories, which are logical groupings of products that can be used for reporting purposes. MFIs can define any number of product categories, containing any number of products, at any time. Products not assigned to any category will belong to Other by default. Product categories are defined from theDefine new category link on the Admin tab.
Products. Products are the different offerings belonging to a product type, such as personal loan, agricultural loan, cattle loan or voluntary or mandatory savings, which are defined in terms of interest rates, minimum and maximum loan amount, etc. When a user creates a loan or savings account, the defaults of the product are inherited by the account.

Loan product

Loan products are defined from the Define new loan product linkon the Admin tab, according to the attribute definitions provided in the attribute table that follows. Loan products can have interest applied in one of three ways: flat, declining balance, and declining balance with equal principal installment. See Interest calculations for loan accounts for more information.

Loan defaults based on previous loan amount

An MFI can specify that default loan amounts are calculated in one of three ways:

Same for all loans. Using this method, loan history is not taken into consideration. Users specify minimum, maximum, and default loan amounts, which is the same for all loan amounts.
By last loan amount. Using this method, the ranges are defined based on the loan history of the client, since a client should be eligible for increasingly larger loans. Users specify the minimum, maximum, and default values for the range of the last loan amount paid by the client. Up to six ranges can be entered, with the first range starting at 0. For example, if the first end range is 3000, then the start range in the second row is 3001.
By loan cycle. Using this method, loan cycles, i.e., the number of successfully repaid loans are used to determine a loan amount. The user enters the maximum, minimum, and default loan amounts for each loan cycle (values can be entered for the following cycles: 0, 1, 2, 3, 4, and >4).

The values entered for whichever method is chosen for both the loan amount field and the number of installment field should be for successfully repaid loans, not rescheduled loans, and should apply to loans based on the same product. Note that previous loans can have late payments and still be considered successfully repaid.

Loan default definitions can be modified after they have been created. Changes are effective immediately and will affect new loan accounts only.

If your MFI is set up to have more than 1 currency, you can specify a currency for the loan product during creation. This is currency will be inherited in all loan accounts created from that loan product. Mifos does not display currency of values throughout, so it is recommended to denote currency in the name of the Loan Product. See Currency Denominated Loan Products for more details.

Savings products

Savings products are defined from the Define new savings product linkon the Admin tab, according to the attribute definitions provided in the attribute table that follows. Note savings products are defined as either mandatory or voluntary.

Attributes for products

Attributes for product categories, all products, and attributes specific for loan products and savings products are provided in the following tables.

Product Categories

Product categories are logical groupings of products which can be used for reporting purposes. Product categories can be created anytime.

System has no limit on the number of product categories that can be created or the number of products that can be put in each category. Therefore, a user can create any number of product categories and a product category can have any number of products under it.
A category called “Other” will be present by default in the Mifos system. If the product does not fall into any of the defined product categories, it can be put in the “Other” category. This category can be modified like any other category.

Attributes for Product Category Creation

S. no.	attribute name	Data type	range	mandatory/optional	can be modified after product category creation	modifications to be applied to all open accounts or to new accounts	description/notes
1.	Product Type	Drop-Down	Loan/Savings	Mandatory	No	N/A	Once a category is saved its product type cannot be changed.
2.	Category Name	Text (50 char)	None	Mandatory	Yes	All closed, open, and new accounts	If category name is changed, change takes effect immediately and all reports generated and all transactions recorded after the change takes the new name.
3.	Description	Text (250 char)	None	Optional	Yes	All closed, open, and new accounts
4.	Status	Drop-Down, single select	Active; Inactive	Mandatory	Yes	New accounts	A category is created in Active status by default. If status is changed from Active to Inactive, existing accounts are not affected, and they can continue to completion under the same product category

Products

At the lowest level of product hierarchy, products are the different offerings of a product type to the MFI clients. Products are defined in terms of interest rates, minimum and maximum loan amount and purpose of the loan. Personal loan, Agricultural loan, Cattle loan etc, are a few examples of Products. The sections below detail out the flexibility provided by the Mifos system in defining these products.

Attributes for Product Definition

The table below lists down the attributes common for loans and savings. Following this, the attributes specific to each product type has been listed down under the respective sections.

s. no.	attribute name	data type	default value	range	Mandatory/ optional for products	can be modified after product creation	modifications to be applied to all open accounts or to new accounts	can be modified at account level	description/ notes
1.	Product Type Name	N/A	None	Loan/Savings	N/A	No	N/A	No
2.	Product Category	Drop-Down	None	Categories defined for Product Type	Mandatory	Yes	Closed + Open + New Accounts	No	See Product Categories. The change in product category is effective from the point the change was made.
3.	Product Name	Alphanumeric (50 chars)	None	None	Mandatory	Yes	Closed + Open + New Accounts	No	Should be unique with the database that it is attached to. Product Details page should display the full name of the product.
4.	Product short name	Text (4 chars without spaces)	None	None	Mandatory	Yes	Closed + Open + New Accounts	No	This is for bulk entry, internal reports, UI pull-downs, etc. This has length limits and must be unique within an installation.
5.	Description	Text	None	None	Mandatory	Yes	Closed + Open + New Accounts	No	This is the brief description of the product. If empty, this attribute name should not appear in the UI.
6.	Product Code	System ID (string)	None	None	Mandatory	No (System generated Uniqued ID)	N/A	No	This is not to be displayed in the UI.
8.	Start Date	Date	Today's date	Current date to one year from current date	Mandatory	Once the start date is reached and the system has changed the state to “Active”, start date cannot be changed. But it can be changed if product is still in “Inactive” status.	All Open and New Accounts - This cannot be changed once any account is created	No	Date when the status of the product is changed to “Active” by the system and the product starts surfacing in the New Loan Creation page. Effective date of change is collected and state change occurs at 12:01am of the day specified.
9.	End Date	Date	None	One year from curent date	Optional	Yes	All Open and New Accounts	No	New accounts should not be created after the end date has passed. State change occurs at 11:59 p.m. of the date specified as the end date. If no end date is entered, then new accounts can always be created after start date
10.	Applicable for groups/ clients/ centers	Drop down; Single-select	None	Clients; Groups; Centers	Mandatory	No	New accounts	No	Whether/not product can be given to individuals, groups, or both. Center’s options are applicable only for savings accounts.
11.	Status	Drop down	As per the start and end dates	Active; Inactive	N/A	Yes	New accounts	No	During creation of a product, status is not user specified. System should create the product in active/inactive states as per the start date.

Attributes for Loan Product Definition

s. no.	attribute name	data type	default value	range	Mandatory/ optional for products	can be modified after product creation	modifications to be applied to all open accounts or to new accounts	can be modified at account level	description/ notes
1.	Min loan amount	Number	None	None	Mandatory	Yes	New Accounts + current open accounts in Partial, Pending and Cancelled states	No
2.	Max loan amount	Number	None	None	Mandatory	Yes	New Accounts + current open accounts in Partial, Pending and Cancelled states	No
3.	Default amount	Number		None	Optional	Yes	New Accounts	No	The value can be overwritten at account level for the particular account
4.	Sources of funds	Multi-select	None	Defined by MFI	Optional	Yes	New Accounts + current open accounts in Partial, Pending and Cancelled states	Yes	Multiple sources of funds can be attached to a product.
5.	Frequency of installments	Number	1 week	Number of days/weeks/months	Mandatory	No	New Accounts	No	If product frequency conflicts with meeting schedule, LO would not be able to assign this product to a client Frequency can be every N number of days, weeks or every N number of months.
6.	Minimum number of installments	Number	1	None	Mandatory	Yes	New Accounts + Current Open Accounts in Partial, Pending and Cancelled states	No	The number of installments entered by LO at the account level should be in between the minimum and maximum number of installments specified at the product definition level.
7.	Maximum number of installments	Number	None	None	Mandatory	Yes	New Accounts + Current Open Accounts in Partial, Pending and Cancelled states	No
8.	Default number of installments	Number	None	None	Mandatory	Yes	New Accounts	Yes
9.	Interest rate type	Drop Down	None	Flat; Declining Balance; Declining Balance - Equal Principal Installment; Declining Balance - Interest Recalculation	Mandatory	Yes	New Accounts	No
10.	Max interest rate	Number	None	0 - 99.9%	Mandatory	Yes	New accounts + current open accounts in partial, pending, and cancelled states	No	Interest rates are annualized percentage, according to the number of days in a year specified at the MFI level.
11.	Min Interest Rate	Number	None	0 - 99.9%	Mandatory	Yes	New accounts + current open accounts in partial, pending, and cancelled states	No	Interest rates are annualized percentage, according to the number of days in a year specified at the MFI level.
12.	Default interest rate	Number	None	0 - 99.9%	Mandatory	Yes	New Accounts	No	Interest rates are annualized percentage, according to the number of days in a year specified at the MFI level.
13.	Grace period for repayments	Number	None		Mandatory	Yes	New Accounts	No	This is the grace period for number of days before the accounts are moved to “Active in bad standing”
14.	Include in Loan Cycle Counter	Checkbox	None	Yes; No	N/A	Yes	All Closed, Open, and New Accounts	No	Yes implies that the product is included in the loan cycle counter for clients and groups.
15.	Can waive interest on Prepay loan	Checkbox	None	Yes; No	N/A	Yes	All Closed, Open, and New Accounts	No	If checked, gives the option to waive future interest when using Repay Loan to repay full loan. If not checked, interest is NOT waived by default.
16.	Grace period type	Drop-down	None	1. None; 2. Grace on all repayments 3. Grace on principal payments only	Optional	Yes	New Accounts	No
17.	Grace period duration	Number of installments	None		Mandatory if options 2 or 3 in the grace period type are selected	Yes	New Accounts	Yes
18.	Product GL Code - Principal	Drop Down - With acceptable GL codes for Prinicipal	None	None	Mandatory	No	New Accounts	No	For loans, one GL Code each should be chosen from a list of acceptable GL Codes for principal.
19.	Product GL Code - Interest	With acceptable GL codes for Interest	None	None	Mandatory	New Accounts	New Accounts	No	For interest, one GL Code each should be chosen from a list of acceptable GL Codes for interest.
20.	Attach Fee Types	Multi-select	None	Predefined fee types	Optional	Yes	All open and New Accounts	Yes- Only Amount/Rate of the “Upfront” fee types can be modified at the account level. The changes are applicable only to that account.	More than one fee types can be linked. Only fee types applicable to loans are shown in the list box (i.e., for a loan product, only fee types applicable to loans are displayed). The attached fee types are charged to all the accounts opened for that prodcut.
21.	Currency	Drop down with available currencies	Default currency	Currencies set in configuration	Mandatory if configured for multiple currencies	No		No	More than one fee types can be linked. Only fee types applicable to loans are shown in the list box (i.e., for a loan product, only fee types applicable to loans are displayed). The attached fee types are charged to all the accounts opened for that prodcut.
22.	Can configure variable installments	Checkbox	No	Yes; No	Optional	Yes	New accounts only	No	Allows the loan product to have variable loan installments. Option is only available if LSIM is on and if Declining Balance interest rate type selected
22a.	Minimum gap between installments	Number of days	None	Numeric value	Mandatory if Can configure variable installments is checked	Yes	New accounts only	No	Specifies the minimum gap between 2 installments in days
22b.	Maximum gap between installments	Number of days	None	Numeric value	Optional	Yes	New accounts only	No	Maximum number of days between 2 installments
22c.	Minimum installment amount	Number	None	Numeric value	Optional	Yes	New accounts only	No	Specifies the minimum installment amount for a variable installment loan
23.	Compare with Cash Flow	Checkbox	No	Yes; No	Optional	Yes	New accounts only	No	Check if during loan creation, loans of this product should have Client's Cash Flow data entered and compared
23a.	Warning Threshold	Number	None	Set by configuration properties	Optional	Yes	New accounts only	No	If the loan installment is above a certain percentage of the cumulative cash flow
23b.	Indebtedness Rate	Number	None	Set by configuration properties	Optional	Yes	New accounts only	No	(Total liability + loan amount)*100/Total capital (amounts entered during Cash Flow) cannot be over the amount specified here
23c.	Repayment Capacity	Number	None	Set by configuration properties	Optional	Yes	N/A	No	[(Total revenues-Total expenses)+Loan Amount]*100 / Sum of Installments amount cannot be over the amount specified here

Attributes for Savings Product Definition

Listed below are the attributes specific to the Savings product type.

s. no.	attribute name	data type	default value	range	Mandatory/ optional for products	can be modified after product creation	modifications to be applied to all open accounts or to new accounts	can be modified at account level	description/ notes
1.	Type of deposits	Drop Down	None	Mandatory/Voluntary	Mandatory	No	New Accounts	No	So depending on this selection, system should show the correct set of GL codes to select from.
2.	Recommended/ Mandatory Amount for Deposit	Number	None	None	Optional	Yes	New Accounts	Yes
3.	Recommended deposit unit- per group member or for whole group	Drop Down	None	Per Individual; Complete group	Mandatory	No	New Accounts	No	Applicable only if the product is applicable for groups. This specifies that the amount mentioned in the above attribute is for each member of the group, or an absolute amount for the whole group irrespective of the number of members present in the group. For center savings account, the unit of recommended amount is always - “per client”.
4.	Interest rate	Number	None	0 - 100	Mandatory	Yes	All Open and New Accounts	No	Annualized rate is stored by the system. In case of change in interest rate, system should calculate the interest using the new rate from the time of change. . However the old interest rate should be recorded for reporting purposes. E.g. Supposing the interest is to be posted on a monthly basis and on the 30th day the rate is changed. Interest should be calculated using the old rate for 29 days and use the new rate for 30th day and onwards.
5.	Balance used for Interest Rate calculation	Drop Down - Single-select	None	Minimum balance; average balance	Mandatory	Yes	All Open and New Accounts	No	Only Compound Interest Calculation is supported If changed, the changes are reflected in the Open accounts as soon as the change is detected by the Mifos system If the attribute is modified, the interest installments should be recalculated.
6.	Time period for interest rate calculation	Number of months; Number of days	None		Mandatory	Yes	All Open and New Accounts	No	If this field is modified, recalculation is not required. The change affects the future interest calculations only. Note: Reference for time period is the start of calender year for all products. Mfios does not currently allow users to configure the fiscal year.
7.	Frequency of interest posting to accounts	Number of months	None		Mandatory	Yes	All Open and New Accounts	No	If this field is modified, recalculation is not required. The change affects the future interest calculations only. If the frequency is changed in between two interest postings, interest should be recalculated with new frequency from the last posting date. Note: Interest should be posted on the last day of the month for all the accounts.
8.	Max amount per withdrawal	Number	None	0 - N	Optional	Yes	All Open and New Accounts	No	Flat Amount of savings account. This specifies the maximum amount that can be withdrawn from a savings account per day. For a group/center savings account, this restriction applies to each withdrawal. If left blank or “0”, then system does not assume any withdrawal limitations.
9.	Min balance required for interest rate calculation	Number	None	0 - N	Optional	Yes	All Open and New Accounts	No	Interest is not calculated on accounts that have balance amounts below this number. If left blank or “0”, then system does not assume any minimum balance required for interest.
10.	GL Code - deposits	Drop Down	None	Acceptable GL Codes	Mandatory	No	All Open and New Accounts	No	One GL Code each should be chosen from a list of acceptable GL Codes for deposits.
11.	GL Code - interest	Drop Down	None	Acceptable GL Codes	Mandatory	No	All Open and New Accounts	No	One GL Code each should be chosen from a list of acceptable GL Codes for interest.

If "Interest rate = 0:" checkbox is selected then other interest related fields (balance to calculate interest, time period for interest calculation etc.) are not displayed.

Product states

Status of a product can be changed at the product definition level. At any given time, a product can be in either an Active or Inactive state:

status	description
Active	By default, new products are created in an Active state. But if the start date is changed to a future date during product definition, then Mifos changes the state of the product to Active when the start date is reached. Active products can be offered to clients and new accounts can be created for them.
Inactive	Mifos changes the product state from Inactive to Active when the product End date, if defined, is reached. The product option then disappears from the list of choices when creating a new account. However, the product itself is not deleted and can be accessed from the View loan products link on the Admin tab.

A product can change the status multiple times. There are no restrictions on state changes.

Restrict product mix

By default, a client can have multiple loans or savings accounts of multiple products. An MFI can restrict the mix of products their clients are allowed by clicking Define product mix from the Admin tab. Mifos checks for violations of this list at the time of loan disbursal.

By default products can mix with all other products, including itself.

Grace periods for loans

An initial grace period is the time between the disbursal date of a loan and the collection of the first regular payment. One, and only one, of the following grace types can be defined for a loan product and, once defined, cannot be modified:

None. No grace period allowed
Grace on all repayments. The client is not required to start repayment until the grace period ends. Interest is not charged during this period. In other words, grace is given on both principal and interest. Start date for loan repayment schedule is essentially pushed out.
Principal only grace. The grace is given on the principal repayments and not on the interest. The client is required to make regular interest payments but is not required to make payments against the principal during the grace period.

A user can modify the grace period for a loan account before the grace period ends for that account. However, grace periods cannot be inserted within a loan payment period, that is, a grace period can exist only before the repayment of the loan starts.

Grace periods cannot be applied to variable loan installments or loan products with interest rate type Declining Balance - Interest Recalculation. MIFOS-4742.

Fixed repayment schedule for Loans with Flat interest rate

Normally, if the date is modified during loan disbursal, then repayment schedule is regenerated accordingly.

After checking 'Fixed repayment schedule:' checkbox (for Loans with Flat interest rate only), if the date is modified during loan disbursal, then repayment schedule is not regenerated accordingly and stays the same as during the Loan Account creation.

To set fixed repayment schedule for existing Loan Product, follow these steps:

1. On Admin page, click View Loan Product link and choose a Loan Product.

2. Click Edit Loan product information link to edit Loan Product.

3. In 'Repayment schedule' section, check Fixed repayment schedule checkbox.

4. From this time, Loan accounts created by using this Loan Product will have fixed repayment schedule.

Note: You can set Fixed repayment schedule also during the new Loan Product creation.