4.9.21.1 Application of Utilization Fee

The following example illustrates the application of utilization fee based on the Slab/Tier structure.

Example

Consider a tranche for 10 M USD. The fee structure is given below. Further, the calculation assumes 365 days in a year:

Tranche Utilization Amount	Util Fee
< 7 Million	0.00
> 7 Mio to < 9 Mio	0.20
> 9 Mio	0.25

Case 1: Calculation based on the Slab structure

Day	Utilization	% Derived from fee structure	Fee Amount
Day1	5,500,000.00	0.00	0.00
Day2	8,000,000.00	0.20	43.83 (8000000 x 0.20/36500)
Day3	9,500,000.00	0.25	65.07

Case 2: Calculation based on the Tier structure

Day	Utilization	% Derived from fee structure	Fee Amount
Day1	5,500,000.00	0.00	0.00
Day2	7,000,000.00	0.00	0.00
Day2	1,000,000.00	0.20	5.48
Day2	Total for Day 2 (Util=8,000,000.00)		5.48
Day3	7,000,000.00	0.00	0.00
Day3	2,000,000.00	0.20	10.95
Day3	500,000.00	0.25	3.42
Day3	Total for Day 2 (Util=9,500,000.00)		14.37

You can also define the above fee structure as a percentage of the tranche amount, as shown below:

Tranche Utilization Amount	Util Fee
< 70 %	0.00
> 70 % to < 90 %	0.20
> 90 %	0.25

The system uses the following amount tags for calculation of utilization and non-utilization fee. The formula to arrive at the amounts is also given.

• Outstanding Amount

  Outstanding Amount = ΣDrawdown amount-ΣDrawdown Repayment

• Non-Utilization amount
  There are two types:

  • For non-revolving:

    Non-Utilization Amount = Tranche Current Limit - ΣDrawdown amount

  • For revolving:

    Non-Utilization Amount = Tranche Current Limit - ΣDrawdown amount +ΣDrawdown repaid

• Tranche Current Limit

  Tranche Current Limit = Initial Tranche Amount - ΣTranche reduction amount till date

You can define Utilization and Non-Utilization fee rules in the Fee Rule – Definition screen.

For more details on this screen refer the Processing Charges and Fees chapter of this User Manual.

Note:

The fee is calculated on the everyday balance and collected as per the schedule you define in the SCHEDULE tab of the LB Tranche Contract Online screen.