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

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-          A lock-in period – before which the deposit can be withdrawn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-          On Maturity, either the money (principal + interest) can be withdrawn, transferred to savings account or re-invested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-          If withdrawn prior to maturity, there is a penal interest rate applicable (and the client may not get the interest rate that is applicable for that period)

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:

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).

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.

4.1   Term Deposit Definition

Data to be captured: