1.1.5 Mode of Repayment

The repayment schedules for interest should be defined for each contract. Depending on the mode of payment applicable, the interest is liquidated, either automatically or manually, according to this schedule.

The mode of repayment for interest can either be automatic or manual. When the repayment is automatic, interest is liquidated on the schedule repayment dates automatically by the Automatic Contract Update program. On the other hand, if the repayment is manual, instructions for liquidation should be entered in the system when the repayment is made.

The mode of repayment has to be specified for a product, but you can change it for a contract.

Repayment type

You can capitalize the interest payment on a contract by:

• Specifying the type of schedule (through the Product Preferences screen) as capitalized. The contract inherits this from the product.
• Specifying the frequency for the capitalization through the Product Default Schedules screen.

The outstanding interest is added to the outstanding principal on the schedule date and this becomes the principal for the next schedule.

Note:

Capitalization is done only for the Main Interest and only if it is a fixed interest of the bearing type.

You can have equated installments for the contract on the schedule dates by specifying amortization as the schedule type and specifying the frequency. These repayment schedules are drawn up taking into consideration the principal and the main interest. If an amount is to be amortized, it should have fixed type of interest and bearing interest payment method.

If you specify the schedule type as Normal, you can tailor schedules for the various components to suit your needs.

A schedule date:

• Should be later than or the same as the Value Date
• You can have only one schedule, for a component for a date
• It cannot be beyond the Maturity Date