11.2.1 Specifying Child Contract Details

In the Child Re-Price Transaction (Split) section of the screen, you can specify the following details of the child contracts.

Table 11-2 Child Re-Price Transaction (Split)

Fields	Description
Product	Select the product under which the child contract is to be created during re-pricing.
Liqd Int on Prepayment	The system allows you to check this option only if the product you select is defined as a Prime Loan product (in the Loans Syndication – Borrower Product Preferences screen). If selected, the system liquidates the interest component along with the principal either on the frequency-based schedule date or at the time of principal prepayment. In case of the latter, system calculates interest only on the principal prepaid.
Amount	Specify the transaction amount for the split/child contract. After you specify the amount, the system displays the following information: CCY- The currency of all child contracts is same as that of the parent contract. You are not allowed to change the same. Total Split Amount - The total amount of all child contracts Note: The sum total of the transaction amounts of all the child contracts can be less than, equal to, or greater than the outstanding principal amount of the parent contract. If the total amount of the child contracts (at the time of re-pricing) is greater than the outstanding principal balance, the system automatically initiates a VAMI (value dated amendment on the re-price date) on the parent contract for the differential amount. Thus, the difference amount is added to the principal amount before the system proceeds with re-pricing.
Amort Amount	Specify the amort amount for the child contracts. Amort Amount is enabled only if the child product is amortization type and the Allow user input installment and User Input Installment is selected at the product level. The system validates this value and displays an error message if the field value is null. Pre-EMI main Interest component schedule is not defaulted to Child contracts even if parent contract has Allow pre-amortization interest selected. Split Reprice is supported only for Amortization contracts having Principal and Main Interest component amount as part of Amortization constant. If Escrow impounding components or any other non main interest component exists and they are not part of the Amortization constant, Split reprice is allowed. Impound components are copied from child product and special amount is not be copied from parent contract. For Tax/ Insurance/ ESCROW components, definition of special component related details for the child products are not supported.
Maturity Date	Enter the date of maturity for the child contract. Child contract generated from the parent contract can have any maturity date but not greater than the maturity date of the tranche and not less than the value date of the re-price.
Child Ref No	The system displays the reference number of the child/re-priced contract. For current and back dated split instructions, the reference number is generated on authorization of the split instructions. For future dated instructions, the reference number is generated either on the reprice value date or on the child contract creation date (through the Partial Split Instruction Processing screen), which ever occurs first.
Consider for Split	Select this check box to specify the split that should be considered for the new contract created for the increase in amount without the default front/fund details. It is mandatory to select this option for one of the splits if Create new contract option is selected. Note: On selecting the Default Fronting option, the Consider for Split is disabled.

Example

• Case 1: Split reprice instruction is captured as follows:

  Split No	Reprice Amount	Consider for Split
  1	12M	Y

  On completing the reprice processing, it is as follows:

  Split No	Reprice Amount	Consider for Split	Child Contract
  1	2M	Y	C2
  2	10M	N	C3

  The split for 12M is internally split into 2M (increase in amount) and 10M (12M-2M). Child contracts C2 and C3 are created for 2M and 10M, respectively. For C3, all the participants are treated as fronting (defaulted from parent contract C1). For C2, there is not any default fronting. User have to capture the fronting values manually using the payment processing browser.
• Case 2: Split reprice instruction is captured as follows:

  Split No	Reprice Amount	Consider for Split
  1	10M	N
  2	2M	Y

  On completing the reprice processing, it is as follows:

  Split No	Reprice Amount	Consider for Split	Child Contract
  1	10M	N	C2
  2	2M	Y	C3

  Child contracts C2 and C3 are created for 10M and 2M respectively. For C2, all the participants are treated as fronting (defaulted from parent contract C1). For C3, there is not any default fronting. User have to capture the fronting values manually using the payment processing browser.
• Case 3: Split reprice instruction is captured as follows:

  Split No	Reprice Amount	Consider for Split
  1	7M	N
  2	5M	Y

  On completing the reprice processing, it is as follows:

  Split No	Reprice Amount	Consider for Split	Child Contract
  1	7M	N	C2
  2	2M	Y	C3
  3	3M	N	C4

  The second split for 5M is internally split into 2M (increase in amount) and 3M (5M-2M). Child contracts C2, C3 and C4 are created for 7M, 2M and 3M respectively. For C2 and C4, all the participants are treated as fronting (defaulted from parent contract C1). For C3, there is not any default fronting. User have to capture the fronting values manually using the payment processing browser.