1.5.2 Charge details

The charge components specified for the product to which you have linked the contract is displayed in tabular columns. You can choose to waive these components for the contract you are processing.

• Component

  The name given to the charge component is displayed here. The attributes defined for this component is displayed in the subsequent fields.

  For a charge component the following details are displayed.

  • The event that triggers the application of the charge being defined.
  • If the charge is a rate, it is defaulted from the product. This can be changed here.
  • The currency in which the charge is specified if it is a flat amount and the flat amount itself.
• Waiver

  The attributes of a charge or fee defined for a product, are applied on all contracts involving the product. To waive the charge or fee on a contract you are processing, choose this option. The charge or fee is calculated but not applied.

  At the time of processing the contract, you can change the following attributes.

  • Rate
  • Rate code for the contract

  These default to the contract from the product, and can be changed for the contract.

  Example

  You have defined a Charge Rule, SplChgPor02. The structure of the rule is as follows:

  • Basis amount Currency – Euro
  • Slab Min/Max Currency - USD
  • Rule Currency – USD
  • Settlement Currency INR

  Amount	Rate	Min Amount	Max Amount
  0 to 250 Thousand	0.05%	100	1000
  > 250 Thousand <= 1 Million	0.06%
  > 1 Million <= 3 Million	0.07%
  > 3 Million	0.08%

  The exchange rates maintained for the currency pair involved are as follows:

  • EUR/FRF = 6.55957
  • USD / FRF = 6.76
  • USD / INR = 47.45

  When this rule is applied on a deal of value 300 thousand FRF, the charge is calculated as follows:

  1. The Contract Amount is converted to the Basis Amount Currency -

     300000/6.55957 = EUR 45734.71

     So the rate applicable is the first slab rate, that is, 0.05%

  2. The Charge is calculated as follows –

     300000 * 0.05 = FRF 15000

  3. The Charge is converted to the Slab Min/Max Currency -

     15000/6.76 = USD 2218.93

     Since the amount is more than the maximum amount the charge is computed as USD 1000

  4. The charge amount is converted to the Rule Currency. Since the rule currency is also USD the charge amount is computed as USD 1000.

     This charge is settled in the settlement currency INR as INR 21.07 while processing the contract.

     Note:

     The charge is debited from the charge account in the currency of the charge account.
• Consider as Discount

  While associating a charge class for either a loans or bills contract, you can indicate whether the charge component is to be considered for discount accrual on a constant yield basis.

  If you select this option the charge received against the component is used in the computation of the constant yield and subsequently amortized over the tenor of the associated contract.

• Accrual Required

  This field is defaulted from the Charge Class Maintenance screen. You cannot change it in this screen.

  During the charge liquidation if this option is selected, the system uploads the charge as Upfront Fee Component. The FELR event is activated and FACR happens based on the frequency maintained at the product level.

  Any subsequent liquidation of the charges of the same component is treated as amendments to the existing uploaded fee component.

  You are not allowed to perform any manual operation on the uploaded fee component.

  Note:

  If both the options Consider as Discount and Accrual Required are selected, the charge amount is considered for Internal Rate of Return calculation. But it is not part of the total discount to be accrued amount.