4.9.18.4 Application of Margin Based on Percentage/Amount Utilized

Any change in the tranche utilization amount changes the margin percentage applied on the drawdowns based on percentage/amount utilized. The following example illustrates this:

Example

Whenever you process new drawdown under a tranche, it increases the utilization amount for the tranche. The new marginis applied not only for the new drawdown amount but to the existing drawdowns as well. This means the new margin will be applicable to the tranche outstanding.

Assume that you have maintained the following structure for margin application based on utilization:

Tranche Amount: 10M

Tranche Utilization in %	Margin (%)
< 30 %	0.00
> 30 % to < 70 %	0.15
> 70 %	0.25

Details of DDs processed and margin applicable is shown in the table below:

Day	DD	Repayments	Outstanding	Applicable Margin (%)
1	5,500,000		5,500,000	0.15 (the DD amount falls in the second slab)
10		2,800,000	2,700,000	0.00
45	5,000,000		7,700,000	0.25 (tranche utilization is greater than 70%)

The new margin is based on the total outstanding under the tranche. In case of drawdowns where initiation of the drawdown has not yet happened, Oracle Banking Corporate Lending provides the margin details in the advices sent to participants. The margin rate indicated in the advices are the margin that is applicable to the borrower at the time of advice generation.

To amend the details, you have to invoke the Margin Maintenance screen from the Application Browser.

For details on amending the margin, refer the heading Amending the margin details in this chapter.