Loans Product / Account Related Enhancements for Self-Funded Groups

Objective

The following conditions / scenarios should be considered when giving out loans

When giving out a loan to a Group Member - the group cannot exceed the Corpus that is available within the group. The Corpus roughly includes all savings balances and loan repayments and penalties minus any loans disbursed (more details on Corpus is available at <link to be added>.
Loans given to members may override Loan-product parameters (like interest rate, loan-amount and loan-term)

Success metrics

Goal	Metric

Goal

Metric

When a new Loan is being given, at the point of disbursal of the loan (not at the time of creation or approval of the loan) - there should be a check to validate if the Group has sufficient funds/corpus for this new loan disbursement

No loan disbursal should be allowed if the funds/corpus of the Group goes negative after the disbursal
The validation of whether the Group has sufficient funds should be done within a second
- This validation should be done only when the global configuration “SELF_FUNDED_GROUPS_ENABLED” is set to true. If this is set to false or this configuration is not present, then the existing functionality of allowing disbursal without funds/corpus balance checking should continue.

It should be possible for a group to override the default parameters (Interest Rate, Loan Term and Loan Amount) for any loan product and when the Group is giving a loan to a member, then the overridden parameters will be applicable. The overridden values should be within the values defined at the product-level by the Organization.

Assumptions

It will be possible to keep the running Group’s Fund/Corpus balance upto date and easily accessible - without having to compute this on-the-go. The corpus is usually computed as all Cash In-flows (savings deposits, loans repayments, member charges and penalties etc.) minus all Cash Out-flows (savings withdrawals, new loans disbursal etc.)

Requirements

Requirement	User Story	Importance	Jira Issue

Requirement	User Story	Importance
Allow Self-Funded groups features to be enabled	As a MifosX Administrator - I would like to set SELF_FUNDED_GROUPS_ENABLED to true - so that Group and Members can use the features - included Loan related features. If this flag is enabled, then the Administrator may also set another flag: ALLOW_GROUPS_TO_CUSTOMIZE_LOAN_PARAMETERS	Must have
Validate that there is sufficient Funds/Corpus available at the Group to support a disbursal	As a Group Leader or data-entry operator, when I try to disburse a new loan, then the system will throw an error if the Group does not have sufficient funds for this loan disbursal	Must have
Allow a Group to enable one or more Group-Linked Loan Products for themselves and override any Loan parameters	As a Group Leader - I would like to define which all Loan Products are applicable for my group - and optionally over-ride any parameters for the Loan Product. The following parameters may be overridden: Loan Amount Interest Rate Loan Term	Must have
For new loans - the parameters defined by the Group will be applicable.	As a Group Leader or data-entry operator, I would like to create new loans for my Group’s members with the overridden parameters. Example: Loan Product defined with interest as 25%. The group wants to give it at 20%. New loans given to the group should be with 20% interest (and not 25%)	Must have

Out of Scope

Setting a “minimum balance” for Funds / Corpus is out of scope. For example: A Group has a corpus of 5,000. Then a new loan of 4,000 may be disbursed. However, if a minimum balance is defined as 1,500 - then this loan may not be allowed as after the loan disbursal the corpus will fall to 1,000 - which is below the minimum balance defined. Such a feature may be taken up in future if there is a need for such a feature from the field.

UI / UX Design

Navigation approach:

→ Administrator enables Self-Funded Groups feature

→ Administrator creates Loan products and sets relevant parameters for them

→ After Creating a group - Group Leader defines which Loan products are applicable for the group and also defines any overriding values for the relevant parameters for each Loan product

→ When creating a new Loan for the member - Group Leader / data entry operator is restricted by the overridden Loan Parameters (like Loan Amount, Loan Term and Interest Rate)

Open questions

Question	Answer	Date Answered

Question

Answer

Date Answered

Which loan product parameters can be overridden by a group

Interest Rate (Yes/No)
Term of Loan (Yes/No)
Loan Amount (Yes/No)

The other parameters of the loan will be based on the Loan-product level definitions at the Organization level.

This needs to be confirmed

Should the validation be that “Funds / Corpus cannot go below zero” or should it be that ““Funds / Corpus cannot go below a threshold defined by the Group. If such a threshold is not defined, then the default validation will apply - i.e. Funds / Corpus cannot go below zero”

To be confirmed by Sinergia