Reverse and Redo Loan Disbursals

Reversing loan disbursals

Data entry errors can result in loans that are created and disbursed to a wrong client/group or recorded against the incorrect client. Or a loan account of the incorrect product can be created and disbursed to a client. The error might not be detected until after multiple repayments have been recorded.

To correct this type of error, a user with the appropriate permissions can reverse the loan disbursal and all payments made again the loan, as long as the loan is within the user’s data scope. The loan must be in an Active in good standing or Active in bad standing states only.

The user clicks the Reverse Loan Disbursal link on the Admin tab, enters the reason for the reversal in the Notes box, and then previews the change before saving it. Mifos changes the loan account state to Cancelled with the flag Loan reversed, and reverses any payments that have been made along with the reversal of the loan disbursal. The notes are included in both the account notes and the adjustment notes, and the change is logged in the account activity. All relevant counters, such as the loan cycle, are decremented and the loan is not included in loan counts for reports. The loan is moved to the Canceled state, with a reason flag of “reversed.”

If several payments have already been collected, the user can use the Redo Loan Disbursal link to recreate a loan and historical payments.

Primary Flow - Reverse Loan Disbursal

1. User clicks on “Reverse loan disbursal” link on the Admin page.
2. User enters in Loan Acct ID and clicks “Find”
3. System makes the following validations:
   • Account id is that of a loan account in “Active in good standing” or “Active in bad standing state”.
   • Account is in user’s data scope.
   • User has permission to perform this action.
4. System: displays the account search result page and the account and client/group information is displayed in the following manner:
5. User: enters the notes and previews and submits.
6. System: following actions are required
7. Reverse all the financial transactions done till date on the account.
8. Log an entry in account activity with description = ‘disbursal adjusted’ and the amount = loan amount
9. Log payment adjustment entries for the payments reversed.
10. Notes specified by the user should be used both as account notes and adjustment notes
11. In transaction history, the entries should also have related transaction Ids. (Not transaction ids—those should be unique, but another ID—same payment ID??)
12. All appropriate counters (like loan cycle, etc) will be decremented-- and this loan shouldn't shouldn't be included in any reports as to "# of loans disbursed", etc. For portfolio reporting purposes, it should be as if this loan didn't exist.
13. Loan account is moved to cancelled state, marked with the reason flag "reversed". This reason flag will not appear as an option when user is manually cancelling a loan.

Alternate flows

1. User searches for an account id which does not exist or which is not a loan account id- An error is thrown
2. User searches for an account which is not in active in good/bad standing state

Additional information

• User is allowed to adjust disbursal only if he/she has permission to do so.
• User is allowed to adjust loan accounts in his/her data scope only.
• Only loans in Active in good standing or Active in bad standing states can be adjusted.

Redoing loan disbursals

After an error has been made and the loan reversed as a result, as explained in Reversing loan disbursals, a user with appropriate permissions can redo the loan disbursal by opening an account for the correct client with the correct product selected.  The loan disbursed should be reversed first before being redone.

To do this, the user clicks the Redo Loan Disbursal link on the Admin tab and selects the client for whom the account is to be redone. The system validates that the client is within the user’s data scope and displays the Redo Loan Account page.  Red warning text indicates that the user is redoing the loan account.

The user enters the loan account information. Note that the user is able to enter a disbursal date in the past.

When the user clicks Continue, the Redo Loan Account Installment page is displayed, on which the Actual Payment Date and Actual Amount paid are user-editable. After the user previews and submits the loan account information, the account is flagged as redone and the loan is immediately moved to Active in Good Standing.

Primary Flow - Redo Loan Disbursal

1. User: clicks on "Redo Loan Disbursal" link on the Admin page.
2. System: makes the following validation:

• User has permission to perform this action.

1. User is taken to the Redo Loan Account Search page where he can select a client/group whose account is to be redone.
2. System makes the following validations:

• Results outside the user's data scope should not be shown to the user.

1. User enters the Client/Group name and clicks on "Search".
2. On clicking Search, the user is taken to the Redo Loan Account Search Results which displays the relevant search results.
3. The user clicks on the required Client/Group name and is taken to the Redo Loan Account page.
4. In the Redo Loan Account page the user can select the Loan product name and click on "Continue".
5. User is then taken to the Redo Loan Account 1 page where the loan account information needs to be entered.

• Note: The system should allow the user to enter a disbursal date in the past.

1. After enetering all the required fields, the user clicks on "Continue".
2. User is then taken to the Redo Loan Account Installments page where he can review the installments.

• Two fields Actual Payment Date and Actual Amount paid are user editable.
• It is possible to choose the mode of payment.

1. After making relevant changes, the user clicks on "Preview".
2. User is then taken to the Redo Loan Account Preview page the entire loan account is presented as a snapshot. If the user wants to make any changes he can click on "Edit loan account information" which redirects him to the Redo Loan Account 1 page.
3. If the user is fine with the loan account information he can click on "Submit" which takes him to a confirmation page.

Additional Information

UI screens

Redo Loan Disbursal: UI screens are accessible here

To view the screens, download and extract the zip folder, click on admin.htm, and if your browser gives you a warning select "Accept blocked content". Click on the Redo Loan Disbursal link under Manage Accounts and follow the user flow below.