10.14 STP Processing for BA drawdown contracts

Processing of BA drawdown contract STP from LB to OL is done as following:

• When a drawdown is booked with a discounted drawdown product with Banker’s Acceptance selected.
• The information in BA Details sub-screen of the LB drawdown contract is copied to the BA Details sub-screen of the OL loan contract.
• Stamping fee (main Interest) is accrued on the loans contract in OL module as per the existing functionality.
• The discount amount calculated in the LB module is posted in the OL loan contract. The stamping fee and discount amount are posted in OL contracts.
• The CoF amount calculated in the LB module is used for computing the P&L in the OL loan contract.
• The Cost of Funding (CoF) rate is derived from the MIS rate given by the treasury multiplied by the number of days and divided by the day basis. Treasury MIS rate is captured in the BA Details screen.
  • Days - Actual number of days between the value date and the maturity date.
  • Day basis - defaulted from the day basis of the main interest component.

  Example:

  • Loan Amount = 2,200,000.00
  • Treasury MIS rate = 0.90%
  • Value date = 31-OCT-2016
  • Maturity date = 30-NOV-2016
  • Number of days = 30
  • Day basis = 365
  • CoF rate = 1 / (1+0.90%*30/365) = 0.99926 (rounded to the 5th place)
  • CoF amount is calculated as ? Loan Amount * (1 – CoF Rate)
  • CoF amount = 2,200,000.00 * (1 – 0.99926) = 1,628.00
• P&L is computed while booking a loan in OL as mentioned below.
  • P&L = CoF amount - discount amount
  • Loss is booked when discount is greater than the CoF.
  • Profit is booked when discount is lesser than the CoF.

  Example:

  • Discount amount = 880.00
  • CoF amount = 1626.19
  • P&L = (1626.19 – 880) = 746.19 (profit)
• Profit or loss accounting is posted in the OL loan contract as part of INIT event.
• The following events are not be applicable for the discounted type of BA contracts in OL module.
  • Margin revision
  • Interest rate revision
  • Value dated amendments for amount, interest rate and date change
  • Partial Prepayments
  • Rollovers

Note:

If you want to pay back the BA drawdown in full before the maturity date, the stamping fee (interest) amount is not recalculated.

The stamping fee (interest) amount collected already as part of BA drawdown booking is not refunded.