Loan Accounts (MifosX FS)

Please refer to the following specs:

Note on Interest Rate: Mifos in the past has only allowed the entry of APR Interest Rates and SHOULD stick with only allowing the entry loan interest rates as APR in order to support the movement for full transparency in microlending (See MFTransparency for more details).  This would be following general best practices for Microfinance.

One thing to consider is technically demanding the printing of the APR rate (i.e, the true APR rate, even if the MFI is using flat interest.) in Mifos and then creates alternative entries for interest rates.

For example, the MFI might enter in the Flat Rate of 15% over six months and then Mifos auto-calculates next to it the true APR Interest Rate and shows both Interest rates in all reports, or only the APR Interest Rate.

That being said, any choice by the community to move away from the current standard in Mifos ,should trigger a discussion with experts in the industry to see what would be the most appropriate design.

– Ryan W.

Additions for Mifos X

  • Loan Amount
    • Add-in ability for discrete amounts for loans (S, Med):  Currently Mifos offers MIN/MAX/Default as an option for loans, but often for MFI's the loan amounts they offer are discrete.  IE, an MFI might have loans for 200,400,500,1000, and 2000.  Mifos would currently require the MIN = 200 and the MAX = 2000, but this allows data entry people to enter-in loans for the wrong amount.
    • Add-in more than 4 cycles for amounts based on Loan Cycle Counter (C, Low): Currently, Mifos is limited to setting a loan amount up to the 4th loan cycle.  After that, it just uses the loan amount values for the 4th loan cycle.  This hasn't been an issue with any Mifos users yet, but could potentially  be, in the future.  If its not difficult to do, would make this dynamic so the user can add on a new loan cycle easily enough.
  • Loan Workflow
    • Loan Approval Chain (S, High): MFIs occasionally have a chain of approvals, i.e, where a Branch Manager must first approve a loan and then an Area Manager provides the final approval.  
      • Variation - Dual Approval Chain (S, High): If its too difficult to create the approval chain, this might be a good replacement 'as the requirement is generally for only dual approvals, although there are a few MFI's that have an approval chain longer than this.
    • Approval based on Loan Amount (S, Med): As a client takes out subsequent loans of higher amounts, they might reach a loan amount that requires approval from higher up the chain.  This could link into the Loan approval chain above.  IE, if the loan is => XXX amount, then an additional approval is required higher up the chain of staff. 
  • Loan Schedule
    • Add in Semi-Monthly Loan Schedules (S, Med): Ability to create a loan that is collected twice a month.  Date selection would be one of two options
      • Two dates selected for each month: ie, 15th and 28th
        • May want to add the option where the user can just select "Last day of month"
      • User selects a conditional date, ie
        • 2nd and 4th Thursdays of a month.
    • Add in Daily Loan Schedules (C, Low): Know of one MFI in India doing daily loans and have only heard of a few others.  User would select the days of the week collection is made (even if its daily, collection is generally only 5 or 6 days of the week) and interest is divided across those payments (ie, if they aren't paying on Sundays, then the interest from Sunday should be spread out over some payments, either the prior week or next week).
    • Allow a loan to have a different schedule than the client's meeting schedule (M, High): This requirement comes in a lot.  The MFI might meet weekly but only collect monthly, or offers products that are weekly, monthly and semi-monthly.  
    • Variable Loan Schedule (M, High): <<Open Item: Was this done already?  Where's the spec?>>
      • *Lump Sum/Balloon Payment  (S, High):* The variable loan schedule feature should meet this scenario.  Scenario is where the client takes out a loan, and pays it back either of 2 ways.  She pays only interest during each collection and then the principal at the end, or she just pays the entire amount (principal + interest) at the end, making no payments between disbursal and collection.  This is often used for Agricultural loans, where the MFI doesn't want to collect until after the crop has been harvested.
  • Repayment
    • Better Loan Rescheduling <<TO DO: I think this may require a lot more thought and spec'ing to get right, but not sure how big of a requirement this is at the individual level.>>
      • Description of Issue: If a client has a problem paying back a loan, a lot of MFI's give the client the option to reschedule the loan.  This means taking the remainder due and setting a new schedule that is often longer and ends up with payments with lower amounts.  Currently in Mifos this means closing an account as rescheduled and opening up a new loan for the remaining  amount, but due to limitations with Mifos, this is difficult for a few different reasons
        • The loans aren't linked, can make reporting difficult.
        • When recreating the loan, its the same loan product and the limitations set within the loan,(Min/Max/Default for Amount,  Interest, and number of payments) may cause limitations in creating the new loan, which means either creating a new loan product or widening the ranges for the loan variables, both solutions which cause various issues.
      • Feature Option 1: Allow rescheduling of an active loan (C, Low): Data entry officer could start a workflow process that takes them through rescheduling, which would mean changing the number of payments and having Mifos recalculate the payments.  This would need to go through the approval process again.  
        • Open Item: What happens to a loan while its going through this process?  Does it get put on hold (ie, no payments/adjustments/etc can be made to it) or does it continue as is until its approved and then the new loan schedule replaces it (as long as there wasn't a payment in the meantime).
        • Variation: Option on whether to recalculate interest or not (C, Low): Technically, creating a longer schedule would mean that more interest is charged.  That being said, most MFI's don't do this and only charge the original interest amount for the loan, but as MFI's move into SME and individuals with larger loans, a more standard approach may be desirable.
      • Feature Option 2: Stick with original process, but allow linking and remove loan variables upon recreation (C, Low): Same process remains but instead of closing the loan the standard way, user goes through a workflow that does the following
        • Closes the original account and marks it as rescheduled
        • Takes user immediately to new loan workflow for the same Loan product, but with these changes:
          • Loan principal is set to the current outstanding balance
          • User cannot change the interest rate.  Instead, the outstanding interest amount is just shown
          • User can set a loan schedule outside the limits of the loan product
          • <<TO DO: Evaluate if there are other changes that need to be made to the primary loan page>>
        • User creates loan and submits for approval
          • in the database, a link to the previous loan is created for reporting purposes.
          • Loan cycle counters are NOT increased
    • Constant repayment schedule despite status of repayments (C, Low): Some MFI's prefer that a client's regularly scheduled payments stay the same, even if the client pays ahead.  For example, if the client needs to pay 200 every week and one week pays 400, then the amount shown due the next week is 200 and the schedule is re-adjusted that the client completes the loan one week early.  (Currently Mifos allows for this, in a way, but the problem is in reports and collection sheets it shows that the client owes zero, when the MFI would like it to still show the client owing 200 and if they miss the payment, then its late).
  • Multi-Currency Support (S, Low): Supports more than one currency - current feature works, but still a pain for MFI as the reporting isn't really integrated.  Additionally, also works as MFI disburses and collects in different currents.  True multi-currency support might include tracking of exchanges rates, integrated reporting, etc.
    • Used by: Al Majmoua, uses USD and Lebanese Lbs - current Multi-currency in Mifos 2.x based on their requirements
    • Other Scenarios: Cambodia is a country where they often operate with four currencies (Cambodian, Thai Baht, USD, and ???)
  •  Ability to Add and Pay fees after a loan has been paid: (C, Low) - Al Majmoua request - they often don't collect late payment fees until after the loan has been paid, so would like to attach this to the loan in post.  In reality, applying the fee after a loan is closed would open it, but it wouldn't accrue interest for outstanding principal since that's been paid and just be outstanding penalty payments that would show up in the clients overall account.