5.2.14.1 Amending Interest Basis

The interest basis defaults from the product level. However, you can change the default value anytime during the lifecycle of the contract except for contracts with interest capitalization type of renewal instructions. When you change the day basis, the system re-computes the schedule interest amount from the start date of the component. The amendment becomes applicable from the value date of the contract. Note that the system considers the margin rates maintained for each participant while re-computing the interest.

The interest for each currency is calculated using the interest basis, which you select:

• 30 Euro / 360
• 30 US / 360
• Actual / 360
• 30 Euro / 365
• 30 US / 365
• Actual / 365
• 30 Euro / Actual
• 30 US / Actual
• Actual / Actual
• 30(Euro)/365.25
• 30(US)/365.25
• Actual/365.25
• Working Days/252
• Working Days/360
• 30/360

For more information on Interest Basis, refer to Interest User Manual.

Note:

• If the interest distribution type is defined as Lender of Actual (in the LB Tranche Contract Online screen) and if there are any liquidated repayment schedules, the system updates the payable/receivable of the respective liquidated payment schedule as a result of change in interest basis.
• You cannot amend the Interest Basis for Lender of Record type of distribution if there are liquidated schedules for the same component.

You can use the navigation buttons -

to view the interest components associated with the drawdown.

Specifying Interest Rate Rounding Components

The Rate Rounding Rule, Rate Rounding Unit, and Rate Rounding Position values get defaulted from Interest Limits Detail screen. If required, you can change these values.

• Amortization Constant Component

  The default value from the product gets defaulted here. The check box is selected if this is an amortization constant component. You cannot change it in the contract level.

• Compensatory Component

  The corresponding compensatory component is displayed from the product for the main interest component.

Note:

• The system considers the Final Rate of the Main interest component to be the Rate for the compensatory component.
• It considers the unfunded amount to be the basis amount for compensatory interest component for the borrower and investors for their respective unfunded period.
• In case of borrower, the basis amount is the total unfunded amount for the borrower. (Unfunded amount = Total outstanding – Funded amount)
  • Here, funded amount is the amount received by the Borrower.
  • In case of Recall by bank for the fronted amount for an investor, the fronted amount is considered as unfunded from the date of recall till the actual funding made by the corresponding investor.
• In case of participant, the basis amount is the unfunded amount for an investor (Unfunded amount = Total outstanding – Funded amount).
  • Here, funded amount is the amount actually funded by the investor. The fronted amount (if any) is not considered as funded until it is actually funded by the investor.
• There is no propagation for the compensatory component. the system calculates it separately on the borrower and investor side.
• In case bank is fronting for an investor, bank receives the interest for the fronting period.
• During interest calculation and accrual processing, the system arrives all in rate as zero if all in rate is negative. All in rate gets displayed as zero in the existing all in rate field in the screen.
• The system does not accrue with interest amount in negative. If the interest was accrued with positive interest rate and later all in rate is changed to zero due to negative rates then, the interest does not get accrued from the interest amendment date.
• If the interest rate amendment is done effective back dated then the system recalculates the accrual by taking all in rate as zero from the amendment date along with the back dated interest amendment process.