9. Annexure B - IC Rule Set-up

9.1 Introduction

This Annexure lists the Interest and Charge (IC) rules that need to be maintained for the TD module of Oracle FLEXCUBE. It also gives the UDEs and rates for which values need to be maintained.

This chapter contains the following sections:\

Section 9.2, "IC Rule"
Section 9.3, "IC Rates Maintenance"

9.2 IC Rule

This section contains the following topics:

Section 9.2.1, "IC Rule Maintenance"
Section 9.2.2, "Capitalized Deposit with Penalty "
Section 9.2.3, "TD with Normal Tenor and Penalty "
Section 9.2.4, "Recurring Deposit Rule "
Section 9.2.5, "Rate Chart Allowed with Penalty "
Section 9.2.6, "UDE Value Maintenance"
Section 9.2.7, "TD with Capitalization"
Section 9.2.9, "TAX_RATE TD with Rate Chart Allowed "
Section 9.2.10, "Recurring Deposit Scheme"

9.2.1 IC Rule Maintenance

The components required to calculate interest (the principal, period, and rate) are broadly referred to as ‘Data Elements’. Data elements are of two types:

System Data Elements (SDEs)
User Data Elements (UDEs)

In addition to specifying how the SDEs and UDEs are connected through the formulae, you also define certain other attributes for a rule using the ‘Interest and Charges Rule Maintenance’ screen. You can invoke this screen by typing ‘ICDRUMNT’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

Note

When the formula needs the current outstanding balance, use one of the following:
- SDE 'DEPOSIT_AMOUNT
- DLY_NET_BAL_M
- DLY_NET_VD_BAL

Use the SDE 'DEP_AMT_INIT' when the formula needs the initial deposit amount (original principal). Interest capitalization will not impact this, however, partial redemption will impact this.
Use 'DAYS' when the formula needs the number of days from last liquidation date of account to current date.
Use 'DAYS_FROM_START' SDE when the formula needs the number of days from account opening date to current date. After rollover, this will restart from the rolled over date (interest start date).
The value for 'PENALTY_APPLY' SDE is always set as '1' (i,e Yes), If you check the box 'Waive Penalty' in the 'Term Deposits Redemption' screen (ICDREDMN), the system will change the SDE value to '0' (i.e No) for that particular account.
The value for 'PENALTY_BASIS' SDE is taken as the redemption amount.
Use the SDE 'DEPOSIT_AMOUNT' for displaying the maturity amount based on interest capitalization.
The system sets the value of 'WAIVE_INTEREST' SDE to '0', if you have unchecked (waiver not applicable) the Waive Interest check box in the' Term Deposits Redemption Input' screen (ICDREDMN). The system sets the value of this SDE to '1' if you have checked the Waive interest check box (waiver applicable).
Use the SDE 'CUMAMT' for base amount to arrive at the interest rate. This SDE can be used in the formula conditions in IC Rules, so as to apply the 'Interest Rate Based on Cumulative Amount' flag. For deposits with non cumulative amount options this SDE will be the current deposit amount.
Use SDE ‘PRE_CLS_FACT’ to compute the percentage of completed tenor and based on the result identify the TD elapsed closing percentage and fetch the linked pre-closure factor. If the pre-closure factor is not maintained for a specific completed tenor percentage, then the SDE considers the value as 1.
Use SDEs ‘PRE_CLS_LIQ’ to identify the liquidation period during pre-closure of the term deposit. If the interest calculation is performed for the liquidated period and for the redemption amount, SDE ‘PRE_CLS_LIQ’ will return the value as ‘1’.
Use SDEs ‘PRE_CLS_ACCR’ to identify the accrual period during pre-closure of the term deposit. If the interest calculation is performed for the accrued period for the redemption amount, SDE ‘PRE_CLS_ACCR’ will return the value as ‘1’.
Use SDE ‘PRE_CLS’ to identify whether the TD is redeemed pre-maturely or not. If the redemption is a pre-mature redemption, then the SDE considers the value as 1 or else the SDE considers the value as 0. For a partial redemption, the SDE considers the formula with the condition PRE_CLS = 1 and executes only for the redemption amount not for the remaining amount. Expected Date of Submission will always be greater than current date.

For details about the screen, refer the chapter ‘Maintaining Interest Rules’ in the Interest and Charges User Manual.

You can maintain rules for the following:

Capitalized Deposit with Penalty
TD with Normal Tenor and Penalty
Recurring Deposit Rule
Rate Chart Allowed with Penalty
Discounted TD with Penalty

9.2.2 Capitalized Deposit with Penalty

Specify the following details:

On Account Opening Month

Check this box.

On Account Closure Month

Check this box.

SDE

Maintain the following SDEs:

DAYS
DAYS_FROM_START
DEPOSIT_AMOUNT
PENALTY_APPLY
PENALTY_BASIS
TENOR
YEAR

UDE

Maintain the following UDEs:

TAX_RATE
TD_1
TD_2
TD_3
TD_PNL

Type

For each of the UDEs, select the option ‘Rate’ from the adjoining drop-down list.

Get Latest

For each of the UDEs, select the option ‘Use Effective’ from the adjoining drop-down list.

Click ‘Formulas’ button and invoke the ‘Formulas’ screen.

You need to maintain two booked formulae and one tax formula.

Formula 1

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Credit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Accrual Required

Check this box.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen.

Specify the following expressions:

Case	Result
(TENOR<=90) AND (DEPOSIT_AMOUNT>0) AND PENALTY_BASIS = 0	((DEPOSIT_AMOUNT* DAYS * TD_1) / (100 * YEAR))
(TENOR>90 AND TENOR<=180) AND (DEPOSIT_AMOUNT>0) AND PENALTY_BASIS = 0	((DEPOSIT_AMOUNT* DAYS * TD_2) / (100 * YEAR))
(TENOR>180 AND TENOR<=730) AND (DEPOSIT_AMOUNT>0) AND PENALTY_BASIS = 0	((DEPOSIT_AMOUNT* DAYS * TD_3) / (100 * YEAR))
(TENOR<=90) AND (DEPOSIT_AMOUNT>0) AND (PENALTY_BASIS = DEPOSIT_AMOUNT)	((PENALTY_BASIS * DAYS) * (TD_1-TD_PNL)) / (100 * YEAR)
(TENOR>90 AND TENOR<=180) AND (DEPOSIT_AMOUNT>0) AND (PENALTY_BASIS = DEPOSIT_AMOUNT)	((PENALTY_BASIS * DAYS) * (TD_2-TD_PNL)) / (100 * YEAR)
(TENOR>180 AND TENOR<=730) AND (DEPOSIT_AMOUNT>0) AND (PENALTY_BASIS = DEPOSIT_AMOUNT)	((PENALTY_BASIS * DAYS) * (TD_3-TD_PNL)) / (100 * YEAR)

Formula 2

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
DEPOSIT_AMOUNT>0 AND PENALTY_APPLY = 1	((PENALTY_BASIS* (DAYS_FROM_START-DAYS)) * TD_PNL) / (100 * YEAR)

Formula 3

Specify the following details:

Book Flag

Select ‘Tax’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
FORMULA1 >0	FORMULA1 * TAX_RATE /100

9.2.3 TD with Normal Tenor and Penalty

Specify the following details:

On Account Opening Month

Check this box.

On Account Closure Month

Check this box.

SDE

Maintain the following SDEs:

DAYS
DAYS_FROM_START
DLY_NET_BAL_M
PENALTY_APPLY
PENALTY_BASIS
TENOR
YEAR

UDE

Maintain the following UDEs:

TD_1
TD_2
TD_3
TD_PNL
TAX_RATE

Type

For each of the UDEs, select the option ‘Rate’ from the adjoining drop-down list.

Get Latest

For each of the UDEs, select the option ‘Use Effective’ from the adjoining drop-down list.

Click ‘Formulas’ button and invoke the ‘Formulas’ screen. You need to maintain two booked formulae and one tax formula.

Formula 1

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Credit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Accrual Required

Check this box.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen.

Formula 1

Specify the following expressions:

Case	Result
(TENOR<=90) AND (DLY_NET_BAL_M>0) AND PENALTY_BASIS = 0	((DLY_NET_BAL_M * DAYS * TD_1) / (100 * YEAR))
(TENOR>90 AND TENOR<=180) AND (DLY_NET_BAL_M>0) AND PENALTY_BASIS = 0	((DLY_NET_BAL_M * DAYS * TD_2) / (100 * YEAR))
(TENOR>180 AND TENOR<=730) AND (DLY_NET_BAL_M>0) AND PENALTY_BASIS = 0	((DLY_NET_BAL_M * DAYS * TD_3) / (100 * YEAR))
(TENOR<=90) AND (DLY_NET_BAL_M>0) AND (PENALTY_BASIS = DLY_NET_BAL_M)	((PENALTY_BASIS * DAYS) * (TD_1-TD_PNL)) / (100 * YEAR)
(TENOR>90 AND TENOR<=180) AND (DLY_NET_BAL_M>0) AND (PENALTY_BASIS = DLY_NET_BAL_M)	((PENALTY_BASIS* DAYS) * (TD_2-TD_PNL)) / (100 * YEAR)
(TENOR>180 AND TENOR<=730) AND (DLY_NET_BAL_M>0) AND (PENALTY_BASIS = DLY_NET_BAL_M)	((PENALTY_BASIS * DAYS) * (TD_3-TD_PNL)) / (100 * YEAR)

Formula 2

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
DLY_NET_BAL_M>0 AND PENALTY_APPLY = 1	(PENALTY_BASIS * DAYS_FROM_START * TD_PNL) / (100 * YEAR)

Formula 3

Specify the following details:

Book Flag

Select ‘Tax’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
FORMULA1 >0	FORMULA1 * TAX_RATE /100

9.2.4 Recurring Deposit Rule

Specify the following details:

On Account Opening Month

Check this box.

On Account Closure Month

Check this box.

SDE

Maintain the following SDEs:

DAYS
DLY_NET_VD_BAL
RD_INSTALL_DUE
RD_OVERDUE_DAYS
YEAR

UDE

Maintain the following UDEs:

TD_1
OVERDUE_PENALTY
TAX_RATE

Type

For each of the UDEs, select the option ‘Rate’ from the adjoining drop-down list.

Get Latest

For each of the UDEs, select the option ‘Use Effective’ from the adjoining drop-down list.

Click ‘Formulas’ button and invoke the ‘Formulas’ screen. You need to maintain two booked formulae and one tax formula.

Formula 1

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Credit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Accrual Required

Check this box.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen.

Specify the following expressions:

Case	Result
DLY_NET_VD_BAL > 0	(DLY_NET_VD_BAL * DAYS * TD_1) / (100 * YEAR)

Formula 2

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expressions:

Case	Result
RD_INSTALL_DUE>0	(RD_INSTALL_DUEOVERDUE_PENALTY RD_OVERDUE_DAYS) /(100* YEAR)

Formula 3

Specify the following details:

Book Flag

Select ‘Tax’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘30 Days’ from the adjoining drop-down list.

Days in a Year

Select ‘360’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expressions:

Case	Result
FORMULA1>0	FORMULA1* TAX_RATE /100

9.2.5 Rate Chart Allowed with Penalty

Specify the following details:

On Account Opening Month

Check this box.

On Account Closure Month

Check this box.

SDE

Maintain the following SDEs:

DAYS
DAYS_FROM_START
DEP_AMT_INIT
PENALTY_APPLY
PENALTY_BASIS
YEAR

UDE

Maintain the following UDEs:

UDE	Type
TD_1	Rate Code as Rate
TD_PNL	Rate
TAX_RATE	Rate

Get Latest

For each of the UDEs, select the option ‘Use Effective’ from the adjoining drop-down list.

Click ‘Formulas’ button and invoke the ‘Formulas’ screen. You need to maintain two booked formulae and one tax formula.

Formula 1

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Credit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Accrual Required

Check this box.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. Specify the following expression:

Case	Result
DEP_AMT_INIT>0	DEP_AMT_INITTD_1DAYS/(YEAR*100)

Formula 2

Specify the following details:

Book Flag

Select ‘Booked’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
DEP_AMT_INIT>0 AND PENALTY_APPLY = 1	PENALTY_BASISDAYS_FROM_STARTTD_PNL/(YEAR*100)

Formula 3

Specify the following details:

Book Flag

Select ‘Tax’ from the adjoining drop-down list.

Debit/Credit

Select ‘Debit’ from the adjoining drop-down list.

Days in a Month

Select ‘Actuals’ from the adjoining drop-down list.

Days in a Year

Select ‘Actuals’ from the adjoining drop-down list.

Accrual Required

Check this box.

Rounding Required

Check this box.

Click ‘Formula Wizard’ button and invoke the ‘Formula Wizard’ screen. In this screen, you need to maintain the following expression:

Case	Result
FORMULA1 > 0	FORMULA1*TAX_RATE/100

9.2.5.1 Formula for Discounted Interest

Sample formula below:

(DEPOSIT_AMOUNT * TENOR * RATE)/(YEAR*100)

DEPOSIT_AMOUNT - System defined Element (SDE) for principal amount of the deposit

TENOR – SDE for tenor of the deposit

RATE – UDE for interest rate on the deposit.

YEAR – SDE days in the year (360/365/366/Actual)

9.2.5.2 Formula for Interest Rate and Maturity Amount

The following formula will be used to calculate interest rate and maturity amount during term deposit account opening.

Sample formula is given below:

Condition	Formula
DEPOSIT_AMOUNT >0	((DEPOSIT_AMOUNT * DAYS * INT_RATE) / (100 * YEAR))

Deposit Amount: 15000 USD

Deposit Booking Date: 01-Jan-2011

Tenor: 180 Days

Interest Rate: 9%

Interest Amount: (15000 * 9 * 180)/ (365 * 100)

= 665.75 USD

Interest Rate and Maturity Amount after Rollover

The example below shows how the interest rate and maturity amount are calculated after term deposit rollover.

Condition	Formula
DEPOSIT_AMOUNT >0	((DEPOSIT_AMOUNT * DAYS * INT_RATE) / (100 * YEAR))

Deposit Amount: 10000 USD

Deposit Booking Date: 01-Jan-2011

Tenor: 180 Days

Interest Rate: 9%

Interest Amount: (10000 * 9 * 180)/ (365 * 100)

= 443.84 USD

Rollover Date: 30-Jun-2011

After Rollover

Deposit amount: 10443.84 USD.

Interest rate: 9.25%.

Interest amount: (10443.84 * 9.25 * 180)/ (365 * 100)

= 476.41 USD

9.2.5.3 Formula for Interest Waive

Based on the ‘WAIVE_INTEREST’ SDE, a new formula will be created in the IC Rule Definition screen for Interest Waiver.

Condition	Formula
DEPOSIT_AMOUNT >0 AND WAIVE_INTEREST=0	((DEPOSIT_AMOUNT * DAYS * INT_RATE) / (100 * YEAR))

The example below explains how the interest that is to be paid out to the account holder will be waived off during redemption.

Deposit account opening date: 01-Jan-2011

Accrual frequency is daily.

The liquidation is at maturity.

Deposit amount: 10000 USD

Tenor: 365 Days

Interest rate: 9%

Maturity date: 31-Dec-2011

Redemption date: 15-Dec-2011

Computed interest amount: till redemption date: 858 .08 USD

Computed interest amount: 900 USD

During Redemption when the ‘Waive Interest’ is set to ‘Y’:

Redemption date: 15-Dec-2011

Redemption type: Full Redemption

Waive interest flag: Y

Amount to be paid to the customer: 10000 USD

During Redemption when the ‘Waive Interest’ is set to ‘N’:

Redemption date: 15-Dec-2011

Redemption type: Full Redemption

Waive interest flag: N

Amount to be paid to the customer: 10858.08 USD

9.2.5.4 Formula for Principal and Interest Details

The following formula will be used to calculate principal and interest amount during term deposit redemption

Sample formula below:

Condition	Formula
DEPOSIT_AMOUNT >0	((DEPOSIT_AMOUNT * DAYS * INT_RATE) / (100 * YEAR))

Deposit account opening date: 01-Jan-2011

Deposit amount: 10000 USD

Tenor: 365 Days

Interest rate: 10%

Interest payout frequency: Monthly

Maturity date: 31-Dec-2011

Computed interest amount till maturity: 1000 USD

Maturity Amount: 11000 USD

Partial Redemption

Redemption date: 01-Jul-2011

Redemption type: Partial Redemption

Redemption Amount: 5000 USD

Interest liquidated so far: 600 USD

Recalculated interest rate: 7%

Recomputed Interest till redemption: 350 USD

Amount to be recovered from customer: 250 USD

Full Redemption

Redemption date: 01-Jul-2011

Redemption type: Full Redemption

Redemption Amount: 10000 USD

Interest liquidated so far: 600 USD

Recalculated interest rate: 7%

Penalty rate: 2%

Recomputed Interest till redemption: 350 USD

Amount to be recovered from customer: 250 USD

Penalty amount to be recovered: 99 USD

Net Amount paid to the customer after full redemption: (10000 - 250 - 99) = 9651 USD

9.2.6 UDE Value Maintenance

You can maintain UDE values for the rules using the ‘Interest & Charges User Data Element Maintenance’ screen.

You can invoke the ‘Interest & Charges User Data Element Maintenance’ screen by typing ‘ICDUDVAL’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

For details about the screen, refer the chapter ‘Giving UDE Values for Condition’ in the Interest and Charges User Manual.

In this screen, you need to maintain the following UDEs for the different IC products. Assume that you have maintained the following IC products:

TD with Capitalization
Normal TD with Simple Interest
TD with Rate Chart Allowed
Recurring deposit Scheme

9.2.7 TD with Capitalization

You need to maintain values for the following UDEs under this product:

TD_1
TD_2
TD_3
TD_PNL
TAX_RATE

9.2.8 Normal TD with Simple Interest

You need to maintain values for the following UDEs under this product:

TD_1
TD_2
TD_3
TD_PNL

9.2.9 TAX_RATE TD with Rate Chart Allowed

You need to maintain values for the following UDEs under this product:

TD_1
TD_PNL
TAX_RATE

9.2.10 Recurring Deposit Scheme

You need to maintain values for the following UDEs under this product:

TD_1
OVERDUE_PENALTY
TAX_RATE

9.3 IC Rates Maintenance

You can maintain rate codes for branches using the ‘‘Interest & Charges Branch Availability Maintenance’ screen.

You can invoke this screen by typing ‘ICDRATMA’ 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 rate codes for all branches of your bank:

FLOATRATE

For the aforesaid rate code, you need to maintain rates and effective dates in the ‘Interest and Charges Rate Input’ screen. You can invoke the ‘Interest and Charges Rate Input’ screen by typing ‘ICDRATMA’ in the field at the top right corner of the Application tool bar and clicking the adjoining arrow button.

These rates are picked up by the TD module while processing interest applicable on a TD account.

Refer the chapter ‘Floating Rate Codes for IC Module’ for details about rate maintenance.