1. Loan Syndication
  2. Processing Repayments
  3. Processing Repayments Manually

6.5 Processing Repayments Manually

The components of a drawdown can be liquidated either manually or automatically, according to the definition you make for the product involving the drawdown, or at time of entering the drawdown. If you have defined automatic liquidation, the Automatic Contract Update function performs the same on the schedule payment day.

If you have defined auto liquidation for the drawdown, you can manually liquidate the components before the liquidation schedule falls due. In addition, if, for reasons of nonrepayment, the liquidation does not take place, you can manually liquidate the components when the repayment is made.

If you have defined manual liquidation for the drawdown, then you must manually liquidate the components a day before the schedule date.

If you select liquidation mode as manual, then on schedule date you can liquidate amount using LBDPYMNT screen. If you liquidate the amount before schedule date then that payment is treated as pre-payment.

You process payments through the Contract Payment screen.
Specify the User ID and Password, and login to Homepage.
  1. On the Homepage, type LBDPYMNT and click next arrow.
    The Loan Syndication - Contract Payment screen is displayed.

    Figure 6-4 Loan Syndication - Contract Payment


    Description of Figure 6-4 follows
    Description of "Figure 6-4 Loan Syndication - Contract Payment "

  2. The manner in which you perform manual liquidation for a drawdown in the Contract Payment screen is the same as for a normal loan contract.
    • Special Amount

      Specify the special amount in case you want to do a special payment or to facilitate the special amount disbursal. The value of the special amount can be positive or negative or it can be zero. You are allowed to make special payment even for future value dated payments.

      Note:

      • Accounting entries for this special swing line disbursement / payment are routed through the borrower’s internal cash collateral DDA account that is defined at the Tranche contract level.
      • Special swing line disbursement / payment are allowed only if the borrower’s internal cash collateral DDA account is defined at the Tranche.
      • Value dated Amendment are not allowed for special amount.
    • Principal Funding Amount paid

      Specify the principal (funded) amount to be liquidated.

      Based on this amount and the total funded amount for the contract, the system arrives at the actual amount to be liquidated. This actual amount is used for the subsequent payment processing.

      Example

      The logic to arrive at the actual amount for which the payment is being processed has been explained below:

      Consider a contract booked with amount of 2M with participants P1, P2, and P3 having asset sharing ratios as 30, 20 and 50 respectively.

      Participant Asset Sharing ratio(%) Amount (million)
      P1 30 0.6
      P2 20 0.4
      P3 50 1
      Assume P1 has not funded and P2 and P3 have funded completely.
      Participant Asset Sharing ratio (%) Funded Amount (million) Unfunded Amount (million)
      P1 30 0 0.6
      P2 20 0.4 0
      P3 50 1 0
      Total funded amount for the contract is 1.4 M and Total unfunded amount for the contract is 0.6 M

      For a borrower repayment of 1M, 1M should be entered in the new field ‘Funding amount paid’ in the manual payment screen.

      Actual amount to be liquidated = Funding amount paid * Contract Outstanding amount /Total Funded amount

      In this case, actual amount = (1M * 2M) / 1.4M = 1,428,571.43M

      This amount is used for all the subsequent payment processing.

      Note:

      • This field is enabled only for those contracts where Sighting Funds option is applicable.
      • The amount you specified here cannot be greater than the total funded amount for the contract.
      • If Main interest component is due for payment and if it is identified for liquidation, the compensatory component also is defaulted along with the main interest component and you can not change the compensatory interest amount being liquidated.
      • For prime contracts with liquidate interest on prepayment as Y, the compensatory component is calculated based on the total unfunded amount and not the unfunded portion of the principal being liquidated.
      • If compensatory interest exceeds the main interest amount being liquidated, then compensatory component is liquidated only to the extent of the main interest amount (effectively the net interest being paid to the borrower/investor will be zero). The residual amount is stored and liquidated as part of subsequent prepayment.
      • Liquidation date cannot be beyond the earliest borrower payment date for the contract.
    • Participant Ratio Change
      1. Participant Ratio change works only for payments where payment is done for a single schedule and not across the schedules.
      2. Participant Ratio change for interest component works only when the Partial Interest Payment Allowed check box is selected at Drawdown.
      3. Sum of amount for a component either it is provided directly through amount field or the amount which is calculated based on the ratio provided, the total sum for each component should be equal to the amount paid for each component which is provided under the section Payment Breakup
      4. For each participant, the calculated amount should not exceed the original due amount which was calculated based on original asset ratio for that schedule.
      5. Subsequent payment on the same value date should be done only through Participant Ratio Change when any of the previous prepayment is done through Participant Ratio Change.

      Table 6-1 Participant Ratio Change Details

      Gields Description
      Participant and Component ratio The values are defaulted from the Participant Ratio Details sub-screen of Drawdown Contract screen.
      Component The values are defaulted from the Payment Breakup section.
      New Ratio and Amount You can either enter ratio or amount. If you enter both, then the system considers ratio. The value of the ratio must be in percentage, that is, from the range 0 to 100.

      The Amount is outstanding balance for that schedule. The amount must be equal to the sum of the amount of that component, that is, it must be equal to the amount paid for that component in Payment Breakup section.

      Interest Refund Required This check box is selected if the bank intends to pass the interest benefit of certain events to the borrower.
      Following are instances of such events.
      • VAMI - Interest decrease, Maturity date is advanced.
      • Prepayments including full prepayments leading to contract closure
      If the check box is selected, the interest is recomputed based on the event that has occurred and the borrower's CASA/GL is credited for BADJ event (Backdated adjustments) defined at the product.This check box is not relevant if rates are decreased as a result of index changes.
      Tranche Repayment Rule Select the redefinition rule for tranche repayment schedule applicable for the prepayment amount. The possible options are LIFO, FIFO, and PRO-RATA.

      At the time of manual payment of schedules, a borrower may want to prepay a part of the payment to the participants involved in the drawdown. Occasionally, in such a scenario, one or more participants may refuse to accept the prepayment.

      Hence, the prepaid amount have to be:
      • Distributed among the other participants or
      • Returned to the borrower
      If the prepaid amount is distributed among the remaining participants, the asset sharing ratio at the drawdown level need to be modified. This in turn affect the availability amount at the tranche level. This is applicable only if the tranche is of revolving type.

      If payment is done without sending the participant faxes system displays the following override message:

      Participant Share amount not matching with the fax send. Do you want to continue?

      Click OK to proceed with the repayment. On authorization of the contract the following error message is displayed:

      Contract authorization possible only after authorizing the overrides

      You are allowed to authorize the repayment of the contract only if you authorize the override in the Credit Authorization Outstanding screen.

      After specifying the Limit Date and Value Date, click Pop till Dt Accrual and the following details get displayed. The system displays the interest amount accrued till the least of value date and limit date in the Amount Due column. Only main interest component is displayed in the Payment Breakup screen.

      Note:

      Principal and non main interest components cannot be paid along with main interest component when this button is pressed. You can specify the borrower Amount Paid which can be lesser than or equal to the Amount Due.
      Payment Reversal STP The check box is enabled and default selected for payment liquidations only. Reversals for fee liquidation are not supported.

      The system handoffs REVP event in the Straight Through Processing Interface Browser screen. This happens after STP processing is complete.

      After STP processing, the Contract Status in the footer is changed from L to A, that is from liquidated to active.

      In addition, LB and OL contracts liquidation mode is changed from semi-auto/auto to manual. You can verify the same in Liquidation Mode field available in Drawdown Contract Details screen under Contract tab and also in Principal Liquidation field available in Loan and Commitment - Contract Input screen under Schedules tab.

    This topic contains the following sub-topics:

Parent topic: Processing Repayments