5.15 Processing Back Valued Interest and Fee for Payables and Receivables

Oracle Banking Corporate Lending recalculates the interest/fee for the paid/liquidated schedule and tracks the payables and receivables for the difference in the interest/fee amounts as a result of:

• At the drawdown level,
  • Back value dated interest rate revisions (REVN) beyond the last liquidation/ schedule date which results in receivable/payable from the borrower to the participants.
  • Back value dated margin (MRFX) changes due to the new back valued drawdowns beyond the last liquidation/schedule date which results in receivable/payable from the borrower to the participants.
  • Backdated amendment (VAMI) beyond the last liquidation/schedule date which results in receivable from the borrower and payable to the participants.
  • Backdated participant transfer (PRAM) beyond the last liquidation/schedule date which results in receivable/payable among the participants due to the new asset sharing ratio.
  • Back valued (before the maturity date of the parent of the rolled over contract) change in the interest rate/spread/margin for a liquidated component of a rolled over contract.
  • Change in Interest Rate/Spread (VAMI) prior to the last PRAM date.

  Note:

  The recalculation of interest due to change in interest rate happens across all drawdowns which use the modified interest rate code.
• At the tranche level,
  • Backdated Participant Ratio Amendment (PRAM) beyond the last liquidation/ schedule date of system calculated fee which results in receivable/payable among the participants due to the new asset sharing ratio.
  • Backdated amendment (VAMI) beyond the last liquidation/schedule date of system calculated fee which results in receivable/payable from the borrower to the participants.

  Note:

  • Any difference between the revised schedule amount and the amount already settled for a borrower and the participants due to the above mentioned scenarios for a fully paid schedule only, are tracked by Oracle Banking Corporate Lending as a receivable/payable amount. Partially settled/unsettled past schedules are tracked through the normal payment cycle.
  • The payables and receivables are tracked for each of the associated events that is,. interest rate revision (REVN) and margin rate changes (MRFX).
  • Appropriate advices are sent to the participants and the borrower for rate revision, margin revision and participant transfer events giving details for the amount due, the amount received and the receivable or payable amount.
  • Whenever a parent drawdown is reversed before the maturity date, all the generated receivables/payables are also be reversed for the same.
  • The payable/receivable tracking is done only for normal/bearing interest type of contracts.
  • The payable/receivable tracking is not applicable for competitive bidding contracts.
  • The parent contract life cycle remains unaffected by the receivable and payable tracking. This means that the parent contract can move to the liquidated status on its maturity date, subject to all schedule payments, even though receivables/ payables might be outstanding for the same.
  • If the payable/receivable settlement is done after maturity date of the liquidated parent, the system fires the payable/receivable event (PRLQ) at the parent contract even after liquidation.
  • If a parent contract is reversed before maturity, the system auto reverses all receivables/payables also.
  • If you have defined the interest distribution type for the Tranche as Lender of Record, the back valued changes like Interest Rate Revision (REVN), Margin Rate Revision (MRFX) and Participant Ratio Amendment (PRAM), that result in payables and receivables, is not allowed beyond the last liquidated schedule. The system propagates the income (Interest/Fee) amongst the participants based on the latest ratio available on the value date of liquidation.

To recall, it is through the Floating Rate Code Definition screen that you maintain the interest rates, which are updated daily as and when they change.

Refer to the chapter titled Maintaining Floating Rates in the Core Services (CS) User Manual for relevant information.

This topic contains the following sub-topics:

• Viewing the Receivables/Payables for a Contract
  
• Processing Settlement of Receivables/Payables for a Contract