7.3.6 Accrual of FAS91 Fee and Stand By Fee

You can amortize the portion of the FAS91 fee components and accrual starts from the date of the liquidation of the FAS91 FEE. For amortizing the fees, you should set the Accrual Method to Straight Line. The amortization amount is calculated based on the end date of the facility or tranche. For example, if the fee is linked to a facility, the facility end date is used as the last day to calculate the amortization amount.

Specifying Other Preferences for the Class

In the Other Preferences section, you can opt for the following:

• Allow Rule Amendment

  You can select this option to allow amendment of the fee rule associated with the contract. If you select this option, you are allowed to change the default fee rule in the Fee Components screen.

• Allow Amount Amendment

  You can select this option to allow amendment of the system calculated fee amount (utilized fee and unutilized fee) at the contract level (in the Fee Schedules screen).

  For more details on this screen, refer the heading Maintaining facility fee schedules in the Loan Syndication Contracts chapter of this User Manual.

  Note:

  This field is applicable only if you select the Fee Collection Mode as Advance.
• Billing Notice Required

  You can select this option to instruct the system to send a billing notice to the concerned borrower/participant as a reminder of the payment. The notice is sent predefined days before the due date of the fees.

  You can capture the number of days, before which the notice should be generated, in the Borrower Product – FEE Details screen.
• Participation Propagation Reqd

  While entering fee details, you have the option of passing the fee collected from the borrower to the participants of a facility, tranche or drawdown. The participants share the fee received as per the fee sharing ratio for a facility and as per the Asset Sharing Ratio for tranche and drawdowns. This information is captured in the Participant Asset Ratio screen.

  However, you are not allowed to propagate the fee to the participants if you have marked the fee as an Agency Fee. In this case, only the lead agent is eligible to receive the fee amount.

Stand By Fee Computation and Accrual

Each participant is entitled to stand-by fees which need to be calculated on undrawn and available portion of its participation in overall facility. As participation mix may vary for specific drawdowns, each participant’s stand-by fee must be calculated on participant’s share of facility less aggregate share of drawdowns over the period (quarterly/monthly).

System needs to compute the stand-by fee based on the undrawn, available portion of the facility for each participant, less the aggregate drawdowns provided by such participant under the facility. Undrawn Portion for each participant = Total Facility (less any permanent reduction of non-revolving tranche) – Aggregate Drawdowns.

The standby fees are to be calculated and accrued on daily basis and payable in arrears (quarterly/monthly/other). The system allows to define the Slab structure in terms of percentage of undrawn portion.

Slab based standby fees may be applicable in the following manner:

• Stand By Fee - Borrower: rate determined by overall borrower drawdown level of total facility and applied to all undrawn amounts, using one single rate for all participants’ undrawn amounts
• Stand By Fee - Participant: based on each participant’s specific drawdown level.

Note:

• Fee accrual is posted at borrower end for Self participant portion accrued amount.
• In case of Risk Participation, Risk Amount is consider for Stand By Fee computation instead of Drawn Amount.
• When external risk participant involved, Stand By Fee computation would be based on DD funded amount instead of risk amount.