Specifying Contract Rollover Details

8.3 Specifying Contract Rollover Details

Instead of liquidating a borrower drawdown loan on maturity date, you can renew it into a new borrower drawdown loan contract, or split it into multiple borrower drawdown contracts, or consolidate it into a single new borrower drawdown contract along with other borrower drawdowns. As part of rolling over a contract, the original contract should be liquidated and a new contract should be initiated. In Oracle Banking Corporate Lending, these two processes are done in a single step.

A borrower drawdown inherits the rollover preferences defined for the borrower drawdown product it uses. By default, the rollover mechanism is Spawn Contract and you cannot change it. This indicates that rolling over the contract creates a new drawdown.

The rollover method indicates:

whether a single new drawdown must be created when the original drawdown is rolled over (Normal Rollover).
whether the original drawdown must be split into multiple drawdowns when rolled over (Split Rollover).
whether the original drawdown must be consolidated into one single drawdown along with other drawdown, when rolled over (Consolidation Rollover).

Note:

The following are applicable for rollover, irrespective of the rollover method you opt:

The system does not allow partial interest rollover.
Rollover is allowed only if the interest rate is fixed till the maturity date for the original drawdown.
You cannot reverse a drawdown for which consolidation rollover instructions are maintained.
SKIM and Fee components are not propagated to the rolled over drawdown. If required, you can add the components after the new drawdown is created on the rollover date.
The drawdown count increases to the extent of rolled over drawdowns.
You are not allowed to specify the rollover instructions if the future dated schedules are present in the drawdown.
The system displays the name of the facility in the rolled over child contract.
After you save the instructions for Normal and Split rollover, system triggers the CAMD event. For consolidation rollover instructions, system triggers the RBOK event. The following advices are generated for these events:
- BORR_ROLL_ADV (for the borrower side)
- PART_ROLL_ADV (for the participant side)
- Amendment Advice is generated when you amend the rollover instructions.
Once rollover gets initiated on the maturity date, system triggers the ROLL event for the original drawdown.
Initiation of the child drawdown does not happen if you have not fixed the interest rate/ exchange rate for the child drawdown.
Utilized/Unutilized portion of tranche gets affected to the extent of rolled over amount less the outstanding principal amount. The system calculates the Utilization/Non- Utilization fee based on this.
An event RNET, for passing the netted accounting entries and for the netted payment message generation (in case of current dated instructions) is fired along with ROLL event.
An event RMNT is fired which have the message generated based on currency settlement days, if future dated rollover instruction is captured.
As part of RNET event the actual entries are passed against customer account which will be offset with the Netting suspense GL.

Note:

Irrespective of the type of renewal you select in the DRAWDOWN tab of the Drawdown Contract Online screen, the system allows you to capture instructions for any one of the renewal types – Normal, Split, or Consolidation. Depending on the type of instructions you capture, the system automatically updates the Renewal Type with the latest value when you save the instructions.

This topic contains the following sub-topics:

Parent topic: Rolling over a Drawdown