Term Deposits - A possible spec

A possible specification for Term Deposits in Mifos X

 

This document describes the new feature “Term Deposits” that is planned to be implemented in Mifos X.

 

Contents:

    Term Deposits Overview

    Interest Rate Charts

    Interest Incentives

    Term Deposits Product Definition

    Interest Rate Chart Definition for Term Deposit

    Interest Incentives for a specific band in the Interest Rate Chart for a Term Deposit

    Term Deposit Creation

    Term Deposit Approval

    Term Deposit Closure at Maturity

    Term Deposit Premature Closure

    Term Deposit Re-invested at Maturity

    Tasks for CodingDevelopment

 

1.       Term Deposits Overview

 

Term Deposits are deposit accounts which are held for a fixed term – like 1 year, 2 years etc.

 

Typically, the term deposits would have the following features:

-          A lock-in period – before which the deposit can be withdrawn

-          Partial withdrawal not possible

-          On Maturity, either the money (principal + interest) can be withdrawn, transferred to savings account or re-invested

-          Usually will have a sliding interest rate chart (i.e. depending on various parameters like loan, gender, age etc, interest rates can vary)

-          Interest is compounded on a certain period

-          If withdrawn prior to maturity, there is a penal interest rate applicable (and the client may not get the interest rate that is applicable for that period)

 

2.       Interest Rate Charts

 

An “Interest Rate Chart” defines an interest rate scheme that can be associated to a product. This will have a band (or range) of deposits periods/amounts and the associated interest rates applicable along with incentives for each band.

The interest rate chart will be maintained along with the creation of the term deposit product and is associated to the deposit product.  For now, it will not be maintained independent of the deposit product. Logically, interest rate charts can be “attached” to different types of products like, Savings accounts, Term deposits, Recurring deposits etc.

Example:

S.No.

From

To

Interest Rate

Ladies Incentive

Senior Citizen Incentive

Description

1

1 month

12 months

9%

+0.5%

+0.5%

12 Months

2

13 months

18 months

9.50%

+0.5%

+0.5%

18 Months

3

19 months

24 months

11%

+0.5%

+0.5%

24 Months

4

25 months

36 months

12%

+0.5%

+0.5%

2-3 years

5

37 months

60 months

12.50%

+0.75%

+0.75%

3-5 years

 

The interest rates and the associated incentives need to be versioned with each change (or if maker-checker is enabled, then with each approval).

When a term deposit account is created, and an interest rate chart is associated to it, then internally, the current version of the interest rate chart is associated to the term deposit. This is not changed, even if the interest rate chart is later modified (i.e. when the term deposit is approved, an interest rate is associated to it. This interest rate for the specific term deposit is not modified even if the interest rate chart is later altered).

3.       Interest Incentives
 

This feature in Mifos X will allow the operations manager to create interest incentive schemes applicable for a specific band in interest rate. For example,

a)      Ladies get an additional 0.5% interest for deposits and senior citizens get an additional 0.5% interest for term deposits for periods upto 3 years.

b)      Ladies get an additional 0.75% interest for deposits and senior citizens get an additional 0.75% interest for term deposits for periods greater than 3 years.

 

4.       Term Deposits Product Definition

 

4.1   Term Deposit Definition

 

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

Validations / Notes

Name

Textbox

Must Have

Name of this Term Deposit product

100 chars

Cannot be blank

Description

TextArea

Must Have

Description for this Term Deposit product

500 chars

Fund Source

Dropdown

Must Have

Source of funds for this product

 

Start Date and End Date

Dates

Must Have

Validity period for this product

Cannot be blank

Currency

Dropdown

Must Have

Currency in which this Term Deposit can be opened

Cannot be blank

Decimal Places

Numeric without decimals

Must Have

Number of Decimal Places that has to be used for computations and display for this currency

3 digits, numeric

Cannot be blank, can be zero

In Multiples Of

Numeric without decimals

Must Have

Deposit can be accepted in multiple of 100’s, 1000’s etc.

10 digits, numeric

View/Edit Interest Rate Chart for this Term Deposit

Link

Could Have

Allows user to view / edit the interest rate chart that is applicable for this term deposit

 

Valid From and To

Read only text

Must Have

Displayed based on Interest Rate Chart selected. The Period within which the current date falls will be displayed.

Example: if today is 22nd Nov 2013. And the interest rate chart has 3 tables related to different validity periods:

a)       01-Jul-2013 to 31-Dec-2014

b)       01-Jan-2013 to 30-Jun-2013

c)        01-Jul-2012 to 31-Dec-2012

Then the dates for a) will be displayed

Interest Rate Chart

Read only table of interest rates and bands

Must Have

Table which has the interest rates applicable as of today.

Example: if today is 22nd Nov 2013. And the interest rate chart has 3 tables related to different validity periods:

d)       01-Jul-2013 to 31-Dec-2014

e)       01-Jan-2013 to 30-Jun-2013

f)        01-Jul-2012 to 31-Dec-2012

Then the interest rate chart for a) will be displayed

Interest Compounding Period

Dropdown

Must Have

Same as for Savings accounts

Cannot be blank or zero

Interest Posting Period

Dropdown

Must Have

Same as for Savings accounts

Cannot be blank or zero

Lock-In Period

Numeric without decimals

With dropdown for Days/Months

Must Have

Same as for Savings accounts

 

For pre-mature Closures

Static Text

Must Have

 

 

Period when interest will not be paid

Checkbox

Must Have

If checked, then, if the deposit is prematurely closed within the specified period, then no interest will be paid

 

Period – From/To

2 text boxes - Numeric without decimals

Must Have

User can select applicable period range, for example: user enters 1 and 30, for “1 to 30 (days)”

Upto 5 digits allowed

Has to be specified if “Period when interest will not be paid” is checked

Period Type

Dropdown

Must Have

User can select “Days” or “Months”

Has to be selected if “Period when interest will not be paid” is checked

Apply penal interest (less)

Checkbox

Must Have

If checked, then it means that there is a penal interest rate applicable if the account is closure before maturity

 

Penal Interest Rate

Numeric with 5 decimals

Must Have

Specifies, how much the interest rate will be reduced by because of this premature closure.

“1%” means 1% less than the interest rate applicable.

Penal Interest Rate Applicable On

Dropdown

Must Have

Specifies if the penal interest is applied on the interest rate for the whole term or applicable only for the interest rate that is applicable for the term till the time this deposit is being closed.

Options available:

a)       Interest Rate Applicable for Whole Term

b)       Interest Rate Applicable for Term till Pre-mature Withdrawal

Example: if penal interest rate was 1%,

For 0-6 months, interest rate is 4%

For 6 to 12 months, interest rate is 5%

 

If an account is opened for 9 months, and was closed at 4 months, then:

 

For option a) – interest will be 4% (i.e. 5% minus 1%)

For option b) – interest will be 3% (i.e. 4% - which is applicable for the 5 month term – minus 1)

Charges

 

Must Have

Same as for Savings accounts

 

Accounting                            

 

Must Have

Same as for Savings accounts

 

 

 

Sample Screen:

 

 

 

4.2   Interest Rate Chart Definition for Term Deposit

 

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

Validations / Notes

Interest Rate Chart for <product name>

Static Text

Must Have

“Interest Rate Chart for ” + term deposit product name

Product name came be underlined to highlight it. For example:

“Interest Rate Chart for Fixed/Term Deposit - Scheme 1

Add New Validity Period

Link

Must Have

Add a new section for capturing a new period of validity and the associated period/amount bands and associated interest rates

 

View Revisions

Link

Should Have

Clicking on this link will show the list of previous revisions made to this Interest Rate Chart.

The screen displayed on clicking this link will be the same as the Interest Rate Chart screen, except that in the “List of Interest Rate Charts” it will show the same Interest Rate Chart, with the available versions of it and the date of revision. The list will be displayed in descending order of date of revision. All other fields/functionality will be the same, except that the View Revisions Link will not be displayed and all fields will be in the read only mode.

Validity Period and associated Chart of Interest (period/amount bands and associated interest rates)

Section

Must Have

This section is displayed in descending order of “Valid From” dates.

This section can be repeated multiple times. At least 1 has to exist, if save is to be allowed.

There cannot be overlaps between periods.

Chart of Interest

Table

Must Have

See below fields and screen shot

 

S.No.

Static Text

Must Have

Running sequence number

 

Period Type

Dropdown

Must Have

User can select “Days” or “Months”

Has to be selected

Period – From/To

2 text boxes - Numeric without decimals

Must Have

User can select applicable period range, for example: user enters 1 and 30, for “1 to 30 (days)”

Upto 5 digits allowed

Either, Period Range or Amount Range or Both can be specified. Both Period Range and Amount Range cannot be blank.

Amount Range

2 text boxes - Numeric without decimals

Must Have

User can select applicable amount range, for example: user enters 0 and 10,000,000, for “0 to 10 million (rupees)” – which is the standard limit defined by central bank norms

Upto 12 digits allowed

Either, Period Range or Amount Range or Both can be specified. Both Period Range and Amount Range cannot be blank.

Interest %

Numeric with decimals

Must Have

Interest rate applicable for this “band” (“band” is a period and the associated amount range)

4 digits before and 5 digits after decimal point allowed. Cannot be blank, but can be zero.

Description

Textbox

Must Have

Description for this “band”

Upto 50 chars. Cannot be blank.

Incentive field(s)

Multiple columns

Should Have

The customer or account attributes that were selected in the “Interest Incentive” screen is displayed as header. The value displayed under this column will be

To edit the values for this field, click on “Incentives” link (or icon).

Delete

Link or Icon

Must Have

Will remove this band.

User is asked for confirmation (popup with yes or now) before this band is removed from screen.

Incentives

Link or Icon

Must Have

Takes user to the “Interest Incentive” screen where user can specify the incentives that are applicable for this band.

 

Add Row

Link or Icon

Must Have

Adds a new “band” row

 

Save Button for the screen

Button

Must Have

If new Interest Rate Chart, will save this internally as “Version 1”. If an existing Interest Rate Chart, then the existing version will not be modified internally, but a new “Version Number” is generated and the interest rate chart is stored against this.

 

 

 

Sample Screen:

 

 

4.3   Interest Incentives for a specific band in the Interest Rate Chart for a Term Deposit

 

This screen will only be invoked from the Interest Rate Chart screen. It will be invoked for a specific band within a validity period in the Interest Rate Chart.

 

This screen will have 2 sections:

a)      Customer Attributes – to specify the interest incentives based on Customer Attributes (like gender / age)

b)      Account Attributes – to specify the interest incentives based on Account Attributes (like an additional 0.5 interest for loans approved in the month of Jan)

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

Validations / Notes

Title line

Static Text

Must Have

Displayed based on the Interest Rate Chart product name/validity period and the “band” description.

Concatenation of the following fields:

Term Deposit Product àName

Interest Rate Chart à A specific Validity Period

A specific Band à Description

 

Customer Attributes

 

Must Have

 

 

Drop down of customer attributes

Dropdown

Must Have

For now, have Gender and Age.

Later it should be possible to add other attributes too

Has to be selected.

 

Note: Gender needs to be added as a standard attribute for Personal Customers in the Client screens

Drop down of condition

Dropdown

Must Have

Will have the following values

= - Equals

!= - Not Equals

< - Is Less Than

> - Is Greater Tha

Has to be selected.

Comparison Value

Dropdown or Text box (depending on the type of the Customer Attribute)

Must Have

If dropdown, then same as the values for Customer Attribute selected.

 

Else, user enters value

If text box, max length 150.

Fixed Interest (%)

Textbox - Numeric with decimals

Must Have

Interest rate applicable for customer with this attribute having this comparison value.

4 digits before and 5 digits after decimal point allowed. Cannot be blank, but can be zero.

 

Either “Fixed Interest (%)” or “Incentive Interest (%)” can be specified. Both cannot be specified at the same time and both cannot be blank.

Incentive Interest (%)

Textbox - Numeric with decimals

Must Have

Additional Interest rate applicable for customer with this attribute having this comparison value.

Plus symbol (+) following by 4 digits before and 5 digits after decimal point allowed. Cannot be blank, but can be zero.

 

Either “Fixed Interest (%)” or “Incentive Interest (%)” can be specified. Both cannot be specified at the same time and both cannot be blank.

Add Row

Link or Icon

Must Have

Adds a row for additional Customer attributes for specifying interest incentives

 

Account Attributes

 

Could Have

Similar functionality as customer attributes, except that drop down will have account specific attributes (like open date, approved date etc.)

 

Save button

Button

Must Have

 

One possible implementation: Save does not save to database, but is temporarily saved to the Interest Rate Chart screen. This data is saved only when Interest Rate Chart is saved.

 

 

Sample Screen:

 

 

5.       Term Deposit Account Creation

 

During the Term Deposit Account Creation process, user will not be able to alter the interest rate that is applicable or the penal interest rates section.

 

Depending on the date of application, amount and deposit period, the interest rate that is applicable (from the relevant Interest Rate Chart) will be displayed on the screen.

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

Validations / Notes

Client Name

Static Text

Must Have

Displayed for the customer for whom this account is being opened

 

Term Deposit Product

Dropdown

Must Have

User can select the term deposit product.

Only Term deposit products are listed in the drop down

Loan Officer

Dropdown

Must Have

Same functionality as Savings Account

 

Submitted On

Date

Must Have

Same functionality as Savings Account

 

Amount

Textbox – Numeric without decimals

Must Have

Amount deposited by this customer as term deposit

12 digits max length

Deposit Period

Textbox – Numeric without decimals with drop down to select period type

Must Have

Period for which the above amount is deposited by this customer as term deposit.

 

The period type drop down will have Days, Months, Years

5 digits max length

Currency, Decimal Places and In Multiples Of

 

Must Have

Same functionality as Savings Account

 

Current Interest Rate Chart

Read Only Table

Must Have

This section displayed based on Interest Rate Chart applicable for this product (based on submitted date, Mifos X displays only table for the currently applicable period)

 

The band that is applicable (for the amount and deposit period) will be highlighted in a different color in the Interest Rate Chart. (with the above values, 2nd band will behighlighted - 31-90 days)

Cannot be changed by user

Pre-mature Closure Penalties

Link/Icon

 

Displays the penalties associated to this account/product

Cannot be changed by user

Interest Compounding Period, Interest Posting Period, Lock-In Period

 

Must Have

Same functionality as Savings Account

 

On Maturity/Closure

Dropdown

Should Have

a)       Allow Withdrawal by Cash – will allow cash withdrawal only

b)       Transfer to Savings Account automatically transferred to the specified savings account

c)        Re-invest (with same product/period) – automatically create new deposit account with the principal + interest for the same period and for the interest rate that is currently applicable (not the same interest that this account was opened with)

d)       Await User/Client Decision

History needs to be maintained. In case a new account is opened, system needs to maintain a link with the old account so that user can navigate from old account to new account (or vice-versa)

 

The facility for navigation needs to be added to the view page for this account.

Transfer to Savings

Dropdown

Should Have

Dropdown of all savings accounts for this customer

This field is applicable and enabled only if “On Maturity” is selected as “Transfer to Savings Account”

For pre-mature Closures

Static Text

Must Have

 

Read-only section for premature closure conditions.

Period when interest will not be paid

Checkbox

Must Have

If checked, then, if the deposit is prematurely closed within the specified period, then no interest will be paid

Read-only section for premature closure conditions.

Period – From/To

2 text boxes - Numeric without decimals

Must Have

User can select applicable period range, for example: user enters 1 and 30, for “1 to 30 (days)”

Read-only section for premature closure conditions.

Period Type

Dropdown

Must Have

User can select “Days” or “Months”

Read-only section for premature closure conditions.

Has to be selected if “Period when interest will not be paid” is checked

Apply penal interest (less)

Checkbox

Must Have

If checked, then it means that there is a penal interest rate applicable if the account is closure before maturity

Read-only section for premature closure conditions.

Penal Interest Rate

Numeric with 5 decimals

Must Have

Specifies, how much the interest rate will be reduced by because of this premature closure.

Read-only section for premature closure conditions.

“1%” means 1% less than the interest rate applicable.

Penal Interest Rate Applicable On

Dropdown

Must Have

Specifies if the penal interest is applied on the interest rate for the whole term or applicable only for the interest rate that is applicable for the term till the time this deposit is being closed.

Options available:

c)        Interest Rate Applicable for Whole Term

d)       Interest Rate Applicable for Term till Pre-mature Withdrawal

Read-only section for premature closure conditions.

 

Charges

 

Must Have

Same functionality as Savings Account

 

Accounting

 

Must Have

Same functionality as Savings Account

 

 

Sample Screen:

 

 

6.       Term Deposit Approval

 

Same functionality as that is present for Savings Accounts

 

 
7.       Term Deposit Closure at Maturity

 

At Maturity (after the deposit term is completed), when “Close” action is invoked, then this screen is displayed.

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

 aut

Transaction Date

Date with Date Picker

Must Have

Date when this account is being closed

 

Amount

Amount with decimals

Must Have

Automatically computed and displayed by Mifos. This is the maturity amount.

Read-only field

Action

Dropdown

Must Have

Specifies how the balance in this term deposit is being given to client:

a)       Withdrawn by Payment Type – i.e. cash, cheque etc.

b)       Transferred to Savings Account

c)        Renew Term Deposit – on submission should take to the Create Term Deposit Account screen with the amount automatically filled with the maturity amount

 

Transfer To Savings Account

Dropdown

Must Have

Shows list of savings account that is owned by this client. If only 1 savings account is present, this this will be auto-selected.

This field is enabled only when Action is selected as “Transferred to Savings Account”

Closure Notes

Textarea

Should have

Any comments that user wishes to enter when closing this account

 

Payment Type

 

 

Same as what is present in Withdrawal functionality

 

Payment Details

 

 

Same as what is present in Withdrawal functionality

 

Save

Button

 

If Renew Term Deposit is selected, then this account should be closed only after the new account is created and not before it.

 

 

Sample Screen:

 

 

8.       Term Deposit Premature Closure

 

Before Maturity (prior to the completion of the deposit term), when “Close” action is invoked, then this screen is displayed.

 

When a fixed deposit is prematurely closed, the functionality is same as closure at maturity except that:

a)      Amount will be different – as the period is different and hence interest will be applicable for a lower period. Also, if there is a penal interest applicable, then the interest will be lower.

b)      The rule using which the interest is computed is displayed to the user

c)       Under Action dropdown, Renewal option will not be available

 

Data to be captured:

 

Field Name

Type

Priority

Must – 1

Should – 2

Could – 3

Description

 aut

All fields the same as “Term Deposit Closure at Maturity”

Amount

Amount with decimals

Must Have

Automatically computed and displayed by Mifos. This is the amount + interest computed for the relevant period – less any penal interest that is applicable

Read-only field

Interest Computation Rule

Dynamic Text

Must Have

Displayed based on the premature interest rates applicable as configured for the product.

For example:

Interest Rate For Pre-mature Closure: [4%]

Rule: Less [1%] On ["Interest Rate Applicable for Term Till Pre-mature Withdrawal"]

 

Values is shown in square braces are variables dynamically displayed based on the product definition

Action

Dropdown

Must Have

Specifies how the balance in this term deposit is being given to client:

a)       Withdrawn by Payment Type – i.e. cash, cheque etc.

b)       Transferred to Savings Account

There will be no option to renew the field

 

Sample Screen:

 
 
9.       Term Deposit Re-Investment at Maturity

 

See above under “Term Deposit Closure at Maturity”

 

10.   Tasks for Coding/Development

 

Possible sequence in which development tasks can be taken up

10.1            Creation/Maintenance of Term Deposits with Interest Rate Charts and maintenance (without incentives) – without versioning

10.2            Interest application (daily batch job)

10.3            Term Deposit Closure at Maturity with interest computation

10.4            Term Deposits Re-investment at Maturity

10.5            Term Deposits Pre-mature Closure with interest and penal interest computation

10.6            Creation/Maintenance of Term Deposits with Interest Rate Charts with Interest Incentives

10.7            Interest application (daily batch job) with interest incentives

10.8            Show versions for Interest Rate Charts