4. Defining Attributes specific to a Fund Product

4.1 Introduction

A 'Fund Product' is a category or type of fund. In this chapter, we shall discuss the manner in which you can define attributes specific to a Mudarabah Asset Management Fund product.

4.2 Specifying Asset Management Product

This section contains the following topics:

You can create a Fund product in the ‘Islamic Asset Management - Product Definition’ screen. You can invoke the ‘Islamic Asset Management - Product Definition’ screen by typing ‘IADFNPRD’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button. In this screen, you can enter basic information relating to a Fund product such as the Product Code, the Description, etc.

For any product you create in Oracle FLEXCUBE, you can define generic attributes, such as branch, currency, and customer restrictions, profit details, tax details, etc., by clicking on the appropriate icon in the horizontal array of icons in this screen. For a Funds product, in addition to these generic attributes, you can specifically define other attributes. These attributes are discussed in detail in this chapter.

Product Code

The code you assign to a product will identify the product throughout the module. The code should contain four characters. You can follow your own convention for devising the code, however, at least one of the characters should be a letter of the English alphabet.

Since the code that you define is used to identify the product, it should be unique across the modules of Oracle FLEXCUBE. For instance, if you have assigned the code ‘LC01’ to a particular product in this module, you cannot use it as a code in any other module.

Product Description

You can enter a brief description of the product, which will be associated with the product for information retrieval purposes.

Product Type

An important detail in defining a Islamic product is to specify the type of product you are creating. The product type identifies the basic nature of a product. In this module, you can create Portfolio funds only.

The accounting entries that are passed, the messages that are generated, and the processing of funds involving this product are determined by the type of product that you create.

Description

You can enter a brief description

Slogan

You can specify a marketing punch-line to be associated with the product. This slogan will be printed on all the advices that are sent to the customer, for an LC involving this product.

Product Group

Each product is classified under a specific group. The different groups are defined in the Product Group Definition table.

Product Group description

A brief description of the product group is displayed in the Product Group description field.

Start Date and End Date

A product can be set up for use over a specific period, by defining a start and an end date. The Issue Date of an LC involving a product should be:

The start and end dates of a product come in handy when you are defining a product for a scheme, which is open for a specific period.

Remarks

You can enter information about the product, intended for the internal reference of your bank. The remarks are displayed when the details of the LC are displayed or printed. However, this information will not be printed on any correspondence with the customer.

Exchange Rate Variance (in %)

For a special customer, or in special cases, you may want to use an exchange rate (a special rate) that is greater than the exchange rate maintained for a currency pair. The variance is referred to as the Exchange Rate Variance.

When creating a product, you can express an Exchange Rate Variance Limit in terms of a percentage. This variance limit would apply to all funds associated with the product.

Override Limit

If the variance between the default rate and the rate input varies by a percentage that is between the Override Limit and the Rate Stop Limit, you can save the transaction (involving the fund) by providing an override.

Stop Limit

If the variance between the default rate and the rate input varies by a percentage greater than or equal to the Rate Stop Limit, you cannot save the transaction involving the fund.

Rate Code

For every Currency Pair and Rate Type combination you are required to maintain Buy, Sell, and Mid Rates.

You need to specify whether the Mid Rate should be used for all Cross Currency transactions or whether the Buy/Sell Rate should be used depending upon the nature of the transaction by selecting the appropriate rate from the option list available.

Rate Type

Specify the Rate Type that should be used for Cross Currency transactions. The adjoining option list displays all the Rate Types maintained through the ‘Rate Type Definition’ screen. You can choose the appropriate one.

4.2.1 Specifying Preferences for a Product

Preferences are the options that are available to you for defining the attributes of a product. The preferences that you define for a product will be inherited by all funds that are associated with the product.

Click the ‘Preferences’ button to invoke the ‘Preferences’ screen. Through this screen you can define preferences for the product you are creating.

When defining a product, you can choose to specify preferences for the product, either by:

4.2.1.1 Associating a Preference Class

To associate a fund preference class with a product, click the ‘Default From Class’ button from the ‘Fund Product Preferences’ screen. A list of the fund preference classes that you have defined specifically for the Securities module of Oracle FLEXCUBE will be displayed. Choose the fund preference class to be associated with the product from the picklist.

4.2.1.2 Defining Preferences for a Product

The following screen defines the preferences class:

Product

Product code is defaulted from the main screen.

Product Description

Product description is defaulted here.

Class Code

Select a valid class code from the adjoining option list.

Class description

Class description of the selected class code is defaulted here.

Fund Type

Specify the following details:

Fund Type

The funds that you enter in Oracle FLEXCUBE can be internal or external. An internal fund is one that originates from Oracle FLEXCUBE. An external fund is one that has originated from a system external to Oracle FLEXCUBE.

As a product preference, you should indicate the type of funds that the product can cater to.

Charge Accrual

Certain charges that you incur in maintaining a fund need to be accrued. You can specify the frequency with which charges should be accrued. The charge components of funds associated with the product will be accrued based on these preferences.

Frequency

As a product preference, you can specify the frequency with which charges should be accrued. While defining the details of the charge, you can indicate the period over which the charge should be accrued.

The accrual frequency can be one of the following:

Start Day

In the case of monthly, quarterly, half yearly or yearly accruals, you should specify the date on which the accruals have to be done during the month. For example, if you specify the date as ‘30’, accruals will be carried out on that day of the month, depending on the frequency.

If you want to fix the accrual date for the last working day of the month, you should specify the date as ‘31’ and indicate the frequency. If you indicate the frequency as monthly, the accruals will be done at the end of every month -- that is, on 31st for months with 31 days, on 30th for months with 30 days and on 28th or 29th, as the case may be, for February.

If you specify the frequency as quarterly and fix the accrual date as 31, the accruals will be done on the last day of the month at the end of every quarter. It works in a similar fashion for half-yearly and yearly accrual frequency.

Start Month

If you set the accrual frequency as quarterly, half yearly or yearly, you have to specify the month in which the first accrual has to begin, besides the date on which the accruals should be done.

For example, you have selected the half-yearly option and specified the start month as June and the start date as 31. In this case, Oracle FLEXCUBE will pass the first accrual on 30 June for the period from January 1 to June 30 and the second one on 31 December for the period from 1 July to 31 December.

If the Accrual Date is a Holiday

Oracle FLEXCUBE carries out automatic accruals at the frequency that you specify, as part of the end of cycle processing. However, if the accrual date falls on a holiday, the accruals are done as per your holiday handling specifications in the Branch Parameters screen.

Click the ‘Exit’ button to exit the screen. You will be returned to the Application Browser.

Calculating Profit

Profit Calculation

Check this option in order to calculate the profit for the fund.

Profit Distribution Type

The Profit Distribution Type can be either specified as Variable or Fixed.

Fund Category

You can maintain the following fund categories here:

Islamic Syndication

Check this box if you want to maintain the specified asset management product as Islamic syndication product.

4.2.1.3 Indicating the Fund Pricing Strategy

The pricing strategy for a fund indicates when and at what price units of the fund should be allocated.

The pricing strategy helps to determine:

Here, since it is a portfolio product type, the system will check the Pre-NAV option by default. You will not be allowed to modify this. Thus the NAV of the fund calculated at Beginning of Day (BOD) will be the basis on which the price of a unit of the fund is determined. For funds with pre NAV pricing, subscription and redemption can be done immediately.

Profit

Profit Calculation

Check this option in order to calculate the profit for the fund.

Profit Distribution Type

The Profit Distribution Type can be either specified as Variable or Fixed.

Note

Profit Distribution Type is enabled only if Profit Calculation Required is checked.

Refer the topic ‘Automatic Daily EOD Batch’ for details regarding batch processing of profit allocation for account classes.

4.2.2 Defining Accounting Roles

Click the ‘Accounting Roles’ button to invoke the ‘Accounting Roles’ screen. Through this screen you can define accounting rules for the product you are creating.

4.2.3 Maintaining Events

Click the ‘Events’ button to invoke the ‘Events’ screen. Through this screen you can define events for the product you are creating.

For further information on Accounting Entries and Advices, please refer to the Product Definition User Manual under Modularity.

4.2.4 Maintaining Branch Currency

Click the ‘Branch Currency’ button to invoke the ‘Branch/Currency Restriction’ screen. Through this screen you can maintain branch currency for the product you are creating.

4.2.5 Managing Customer Details

Click the ‘Customer’ button to invoke the ‘Customer Restriction’ screen. Through this screen you can manage customer details you are creating.

4.2.6 Maintaining Interest Details

Click the ‘Profit’ button to invoke the ‘Interest Details’ screen. Through this screen you can manage interest details you are creating.

4.2.7 Maintaining Charges Details

Click the ‘Charges’ button to invoke the ‘Charge Details’ screen. Through this screen you can manage charge details you are creating.

4.2.8 Maintaining Tax Details

Click the ‘Tax’ button to invoke the ‘Tax Details’ screen. Through this screen you can manage tax details you are creating.

4.2.9 Maintaining MIS Details

Click the ‘MIS’ button to invoke the ‘MIS Details’ screen. Through this screen you can manage MIS details you are creating.

4.2.10 Maintaining Fields

Click the ‘Fields’ button to invoke the ‘Product User Defined Fields’ screen. Through this screen you can manage user defined field details you are creating.

4.2.11 Maintaining the Profit Distribution Rate

You can maintain the Profit Distribution rate as a rate code. This can in turn be linked to the account class of the deposit accounts, i.e. the rate code can be linked to the UDE in the profit product. Once the profit calculation for the fund is completed, the UDE will be available in the ‘Profit Distribution Rate Code Linkage’ screen. You can invoke the ‘Profit Distribution Detailed’ screen by typing ‘IADPDUDE’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

You need to maintain the following details here:

Fund Id

Select the Fund Id to which you wish to link the profit distribution rate code from the option list. The option list displays all valid funds for the respective branch.

Currency

Displays the currency of the fund selected.

Account Class

Specify the account class of the deposit or Contra deposit accounts from the option list. The option list contains all account classes linked to the fund selected.

Rate Code

Select the rate code that is linked to the UDE of the Profit and Charges Product, which is further linked to the account class.