Term Deposits - A possible spec
- Binny Gopinath Sreevas
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- A lock-in period – before which the deposit can be withdrawn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- On Maturity, either the money (principal + interest) can be withdrawn, transferred to savings account or re-invested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- If withdrawn prior to maturity, there is a penal interest rate applicable (and the client may not get the interest rate that is applicable for that period)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