3.3.6 Specifying Fee Components for a Borrower Product

You must indicate the applicability of fee components for borrower contracts. You can use the Fee Definition screen for this.

Specify the User ID and Password, and login to Homepage.

From the Homepage, navigate to Loan Syndication - Borrower Product Definition screen.

1. From the Loan Syndication - Borrower Product Definition screen, click Fee.
   The Fee Details screen is displayed.

   Note:

   The fields which are marked in asterisk red are mandatory fields.

   Figure 3-10 Fee Details

   
   

   
   Description of "Figure 3-10 Fee Details"

   
   
2. You have the option of associating a Fee Class to the components, in which case, the attributes of the class is defaulted to the component. To do the same, click the Default From Class button.
   The fee details maintained for the fee class in Fee Class Maintenance (LFDFEECL) screen gets defaulted.

   System defaults the parameters of the selected fee component. However, you can change the parameters according to your requirements.

   In this screen, you associate fee components applicable for the product you are defining. Specify the following in this screen:

   Table 3-8 Fee Details

   Fields	Description
   Component	Enter the fee component you are maintaining details for.
   Description	Enter a description for the fee component.
   Basis Amount Tag	When defining fees, you can select the applicable amount tag on which the fee is to be calculated from the option list given. The following amount tags are available for a Tranche product: User Input – adhoc fee Outstanding – to collect fee on the outstanding portion of the tranche. COMMERCIAL_LCOS – to collect fee as a percentage of the outstanding amount of all the Commercial LC type of drawdowns linked to the tranche. STANDBY_LCOS - to collect fee as a percentage of the outstanding amount of all the Standby LC type of drawdowns linked to the tranche. ISSUER1_LCOS up to ISSUER10_LCOS – to compute fee on the outstanding amount of all the LC drawdowns for a given issuer. This fee, referred to as the issuance fee, is paid only to the bank that issues the LC. You have to define an LC Issuance Fee component to be associated with each of these ten basis amount tags. Note: Since issuance fee is not distributed across all the participants, the same is not displayed in the Participant Ratio Details screen. The participant who is identified as the issuer of the LC is entitled to 100% of this fee. Utilized – to collect fee on the utilized portion of the tranche Unutil – to collect fee on the unutilized portion of the tranche The following example illustrates the difference between utilized and unutilized basis amount tags with reference to Revolving and Non-Revolving tranches: Example Non-Revolving Tranche In the case of a non-revolving tranche, the unutilized amount does not take into consideration the repayments made by the customer under any of the draw-downs under the tranche. A customer has three draw-downs of USD 100,000 each, under a tranche of USD 500,000 of which: Draw-down 1 has been repaid Draw-down 2 has a total outstanding of USD 72,500 Draw-down 3 has no repayments In this case: Outstanding amount : USD 172,500 (DD2-72500; DD3-100,000) Utilization amount: USD 300,000 Non-utilization amount : USD 200,000 Revolving Tranche In the case of a revolving tranche, the utilization or non-utilization amount takes into consideration the repayments made by the customer under any of the draw-downs under the tranche. Considering the same example as above, in this case: Outstanding amount is : USD 172,500 (DD2-72500; DD3-100,000) Utilization amount is: USD 172,500 Non-Utilization amount is: USD 327,500 (500,000 – 172,500)
   Agency Fee	If, for the fee component that you have selected, you have selected the box Agency Fee, the income on the component is meant for the leading agent alone. It does not get propagated to the participants. Note: If you select the check box Agency Fee, the box Participant Propagation Required is disabled.
   FAS91 Fee	Select this check box to perform FAS91 computations. The system validates if: The Agency Fee check box is selected. The Basis Amount Tag is maintained as USER INPUT. The Fee Collection Mode is ADVANCE. The Accrual Required box is checked
   Participant Driven Fee	If you select this check box, the system allows you to define an individual fee amount for each participant. Note: If you check this option, you are not allowed to select the Agency Fee option. System performs the following validations on checking the Participant Driven Fee box: The Basis Amount Tag is maintained as USER INPUT. The Fee Collection Mode is ADVANCE. It is mandatory to check the Participant Propagation check box at the product level. The Accrual Parameters are disabled.
   Expense Fee	Select this check box to enable the expense fees. The fees can be accrued or amortized. The expenses may be flat amounts (such as Legal Fee) or rate based on a specific basis amount (such as fee paid to credit guarantor) These are expenses incurred against a contract which the bank does not directly recover from the borrower. These expenses can be one-time expenses or periodic expenses or paid in advance or in arrears. They may be incurred at the Facility/Tranche/ Drawdown levels. In expense the fee calculation happens only within the schedule period of the contract whereas in normal arrears the fee calculation happens from the start of the contract till the schedule end date and for advance from the start of the schedule till the end of the maturity date. For more information refer, to Expense Fee section in this User Manual.
   Fee Rule Type	Select the Fee Rule Type applicable from the option list. You have the options ICCF and Margin. The rules are applicable depending on the rule type you select.
   Fee Rule	Select the rule applicable from the option list given. The option list includes Fee Rules that you have defined in the Fee Rule Maintenance screen.
   Fee Basis	The Fee Basis indicates the method in which a given fee schedule amount has to be calculated. The values in the drop-down list are: 30(Euro)/360 30(US)/360 Actual/360 30(Euro)/365 30(US)/365 Actual/365 30(Euro)/Actual 30(US)/Actual Actual/Actual 30(Euro)/365.25 30(US)/365.25 Actual/365.25 Working Days/252 Working Days/360 30/360 For more information on fee basis, refer to Charges and Fees User Manual.
   Fee Collection Mode	While defining fees, you can specify whether the fee is to be collected in advance or in arrears.
   Payment Type	The system displays the payment type.
   Fee BPS Rate Applicable	Select this check box to indicate that BPS rate is applicable to the payment type. Note: Payment Type and Fee BPS Rate Applicable options are enabled only if Basis Amount Tag is USERINPUT.

   Following are the Accounting Roles and Amount Tags when the fee is collected in advance:

   • At Fee Collection (FLIQ)

     -	Dr/Cr	Accounting Role	Amount tag	Amount
     As of the Fee Inception Date (FLIQ)	Dr	Customer	<COMPONENT>_ LIQD (Advance fee component)	Balance for the fee basis amount tag* Fee Rate * Accrual Basis * No. of. Days
     	Cr	Fee In Advance	<COMPONENT>_ LIQD (Advance fee component)	Balance for the fee basis amount tag * Fee Rate * Accrual Basis * No. of. Days

   • At Fee Accrual (FACR)

     -	Dr/Cr	Accounting Role	Amount tag	Amount
     Daily Accrual (FACR)	Dr	Fee In Advance	<COMPONENT>_ ACCR	Liquidated Fee Amount / No.of. Days
     	Cr	Income	<COMPONENT>_ ACCR (Advance fee component)	Liquidated Fee Amount / No.of. Days

   • Description of the Amount Tags

     The following table gives the description of the amount tags:

     Amount Tag	Description
     CUSTOMER	Borrower
     <COMPONENT>_LIQD	Advance Fee Component Liquidated
     <COMPONENT>_ ACCR	Advance Fee Component Accrued

   Following are the Accounting Roles and Amount Tags when the fee is collected in arrears:

   • At Fee Accrual (FACR):

     Accounting Role	Dr. / Cr.	Amount Tag
     Component_REC	Dr.	Component_FACR
     Component_INC	Cr.	Component_FACR

   • At Fee Collection (FLIQ):

     Accounting Role	Dr. / Cr.	Amount Tag
     CUSTOMER	Dr.	Component_LIQD
     Component_REC	Cr.	Component_LIQD

   • Description of the amount tags

     The following table gives the description of the amount tags.

     Amount Tag	Description
     Component_REC	Fee Component Receivable
     Component_INC	Fee Component Income
     CUSTOMER	Borrower
     Component_LIQD	Fee Component Liquidated
     Component_FACR	Fee Component Accrued

   This topic contains following sub-topics:

• Specifying Liquidation Preferences
  
• Billing Notice Preferences
  
• Accruals Preferences
  
• Other Preferences
  
• Date Preferences