5.2.27.1 Processing the Late Payment Charges

System identifies the loan contracts where grace period has expired and tracks due date, amount paid and amount settled for each component of the loan. If late payment charge component has been defined for a loan contract, that is,. if the Special Penalty Component is selected for a component in a contract, then system does the following:

• System identifies the late payment charge basis components (components for which late payment charges are applicable) from the loan contract details.
• Since late payment charges are applicable for partially paid overdue schedules also, system validates if there is any outstanding amount due on the current date for components selected for late payment charges.
• If there is any outstanding amount, then system calculates the total outstanding amount on all components in this schedule and stores the value in the amount tag SCH_AMT_OS. This forms the basis of calculating the late payment charge.
• System then calculates the late payment charge by multiplying the value of SCH_AMT_OS with Fixed Rate or Flat Amount, based on the setup.
• Each late payment charge schedule is separately stored with the due date same as the original schedule due date.
• The calculation date (schedule date + grace days) of each late payment charge calculated is also stored for information and reporting purpose.
• System does not pass any accrual entries for the special penalty component.