4.23.2 Propagating Base Rate Floor and Ceiling for an Effective Date

Oracle Banking Corporate Lending allows you to change the application date for floor and ceiling base rate. In such cases, if the base rate for the drawdown is not within the floor and ceiling, then the system propogates the floor or ceiling rate to the active and future dated drawdowns under the tranche which have fixed interest type.

If Floor/Ceiling restricted to base rate is selected then the Floor and Ceiling propagation is applied to the margin adjustment component. Propagation happens online whenever interest rate is fixed or changed. This can happen while booking a new drawdown or while processing a Rollover/Reprice instruction or during IRAM.

If the Base rate for the active drawdown is less than the new floor value defined for the Base rate at the Tranche level, then new Floor value is propagated as the Base rate for the drawdown. Interest Rate Amendment (IRAM) event is triggered on the drawdown with application date as value date for the Base rate change.

If the Base rate for the active drawdown is greater than the new Ceiling value defined for the Base rate at the Tranche level, then the new Ceiling value is propagated as the Base rate for the Drawdown. Interest Rate Amendment (IRAM) is triggered on the drawdown with application date as value date for the Base rate change.

If the new base rate Floor/Ceiling is greater than or less than the base rate of the uninitiated drawdown, then the base rate for the uninitiated drawdown is updated with the new rate based on the floor/ceiling. Interest Rate Amendment (IRAM) event is registered on the uninitiated drawdown for this change.

Note:

Propagation happens for base rate only at the time of batch.

Propagation process happens during batch if new floor and ceiling is maintained or existing maintenance is amended at the tranche level, with effective date as application date, provided no online propagation has happened after the Floor/ceiling maintenance.