Currency-wise Limits for Interest Rate Application

From the Homepage, navigate to Interest Class Maintenance screen.

From the Interest Class Maintenance screen, click Rates tab.

The Rate screen is displayed.

Figure 2-2 Rates

Description of "Figure 2-2 Rates"

In this screen, the following limits and rounding rules can be defined for each currency and for each tenor:

For fixed rate components, the default rate to be applied in respect of the interest component.
The allowable limits for the interest rates in respect of the component. You can define the minimum and maximum applicable interest rates. If the interest rate falls below the minimum, the minimum rate is applicable; similarly, if the interest rate exceeds the maximum, the maximum rate is applicable.
For floating rate components, the allowable limits for the spread that can be applied on the floating rate. If the spread falls below the minimum, the minimum spread is applicable; similarly, if the spread exceeds the maximum, the maximum spread is applicable.
The basis on which interest is calculated for each currency, for which the limits are applicable.
How the interest amounts in respect of the interest component in the specified currency are to be rounded – truncated, rounded up, rounded down or rounded near.
If truncation is opted for, the number of digits after the decimal place, to which interest amounts in respect of the interest component in the specified currency must be truncated. The number of digits specified for truncation cannot exceed the allowed decimal places for the specified currency. If not specified, the number of decimals indicated in the Currency Definition for the specified currency is picked up by the System.
For the Round Up, Round Down and Round Near options, the rounding unit which is the lowest possible measure in which the interest amounts, in respect of the interest component in the specified currency, can be considered. This value cannot be less than the rounding unit for the specified currency in the Currency Definition. If not specified, the rounding unit indicated in the Currency Definition for the specified currency is picked up by the System

Note:

When generic interest limits are being defined for all currencies in the Currencywise Limits screen (that is, the ALL option has been selected in the Currency field), the fields relating to rounding rules are not available for definition.
The currency rounding rules can be defined only for classes that are maintained for Loans and Money Market modules

You can specify the following details in this screen. For information on fields, refer to the field description table.

Table 2-6 Rates Details

Field	Description
Interest period basis	You can indicate how the system must consider the tenor basis upon which interest is computed over a schedule or interest period, in respect of the interest component. You can specify the interest period basis for each currency in the Currency-wise Limits screen, which you can invoke by clicking the Rates button in the Interest tab in the Interest Class Maintenance screen. You can choose any of the following options. Including the From Date - For all schedules, the period considered for interest calculation includes the start date and exclude the end date. Therefore, the value date of the loan is considered for interest calculation and the maturity date is excluded. Including the To Date - For all schedules, the period considered for interest calculation excludes the start date and include the end date. Therefore, the value date of the loan is excluded, but the maturity date is included for interest calculation. Including both From and To Dates - The period considered for interest calculation includes both the value date and the maturity date. This means: For the first schedule, it includes the Value Date. Interest is calculated for the Value Date. For the last schedule, it includes the Maturity Date. Interest is calculated for the Maturity Date. Excluding both From and To Dates - The period considered for interest calculation excludes both the value date and the maturity date. This means: For the first schedule, it excludes the Value Date. No interest is calculated for the Value Date. For the last schedule, it excludes the end date. No interest is calculated for the Maturity Date. Note: This feature is only available for classes that are maintained for Loans module.
Maintaining positive or negative values for interest limits and the default rate	When you maintain currency-wise interest rate limits for the interest class, you can indicate the applicable sign for the interest limits values as well as for the default rate value. If required, you can assign the negative sign, indicating a negative range for the limits, or a negative default rate. In the case of Default Rate, the assigned sign is defaulted along with the rate specified, for contracts that use a product associated with this class. Click on the Rates button in the Interest tab in the Interest Class Maintenance screen, to invoke the Currency-wise Limits screen. Note: This feature is only available for classes that are maintained for the Money Market module.
Interest basis	A new interest basis methods are introduced to support interest and penalty calculations based on working days and 365.25 as denominator for leap and non-leap year. Different values for the numerator basis are as explained below: Actual - Actual number of days in a month is taken. 30 (Euro) - 30 days is considered for all months including February irrespective of leap or non-leap year. 30 (US) - 30 days is considered for interest computation for all months except February where the actual number of days is considered. Working Days - To calculate the working days, branch holiday maintenance of the branch where loan is booked is considered. During interest calculation the days are calculated based on the working days. Different values for the denominator of the interest basis are as explained below. 252- Number of days in a year is taken as 252 which is the number of working days. 360 - Number of days in a year is taken as 360 irrespective of actual number of calendar days. 365 - Number of days in a year is taken as 365 for leap as well as non-leap year. Actual: Actual number of days in a year is taken for interest calculation which is 366 for non-leap year. 365.25 - Number of days in a year is taken as 365.25 for leap as well as non-leap year. Note: 252 interest basis is applicable for all schedule type like, bearing, Amortized, Discounted, and so on. There is no restriction in component level for the application of 252 basis. The system does not consider the currency holiday preference for working day calculation. It considers only the branch local holiday maintenance. No changes are done to interest basis available in currency definition screen. There is no any change in grace days calculation for penalty interest even if interest basis is Working Days. It is based on calendar days. Interest accrual happens only for working days. The interest basis gets the number of days from the previous accrual date to the current accrual date. If there are no holidays in a month, even though denominator is 252, interest accrual happens till end of the month. In case an ad-hoc holiday is declared, then the system does not recalculate the interest as part of ad-hoc holiday processing. Accrual adjustment for the unaccrued portion happens on the schedule end date. If the Interest Basis is selected as 30SPL/360 then number of actual working days in a month is taken as 30 and number of days in a year is taken as 360 for interest calculation. The interest calculation based on the computation days.
Interest Rate Rounding Components	The Rate Rounding Rule, Rate Rounding Unit, and Rate Rounding Position values get defaulted from Interest Limits Detail screen. If required, you can change these values.