4.35.1 Processing All-In Rate Floor and Ceiling rates

System validates if all-in rate of the interest component for the loan contract is within the Floor and Ceiling for the below scenarios:

• Back and future dated floor and ceiling rates maintenance are not allowed.

Negative interest component is not shown on interest component LOV and it is applicable for all ‘Fixed’, ‘Floating’, ‘Agency’ contracts except ‘Special’.

Online activities

• New Back/Current/Future Dated Loan booking
• Value dated amendment for rate changes
• While capturing Re-price instruction rate details.
• While processing Re-price transaction.
• While manually linking loan with a commitment through Linkage Amendment screen.

Batch activities

• Rate revision for floating rate loan contracts

For above mentioned activities except future dated transactions, if all-in rate of the interest component is not within the floor and ceiling limit then an override is thrown as, $1 for component $2 is $3. But $4 maintained at commitment is $5. Contract books with $6 as $7. OK to proceed?, The Min/Max rates maintained for the base rate in Interest limits (product currency level) are not validated for a loan contract, if all-in rate maintenance is available for the loan product at the linked commitment contract level.

For online activities, if all-in rate of the interest component for a loan contract is not within the floor and ceiling limit, the system displays the following override message:

All-in rate is less/more than the maintained Floor/Ceiling value

If you click OK button, Floor/Ceiling propagation is processed as follows:

• If the calculated all-in rate is less than the maintained Floor value of all-in rate, system considers the Floor value as the all-in rate for interest computation.
• If the calculated all-in rate is more than the maintained Ceiling value of all-in rate, system considers the Ceiling value as the all-in rate for interest computation

System does not allow you to save the transaction if you cancel the override.

Rate Amendment (RTAM) event is registered for the loan during floor and ceiling propagation, however no accounting entries are posted for the RTAM event.

During online transaction or End of Day batch process, if the Floor and Ceiling propagation happens for multiple interest components associated with a loan, then RTAM is registered individually for the propagation of Floor/Ceiling of each interest component.

For batch activities, overrides are not logged; however system validates all-in rate based on the Floor/Ceiling and apply the necessary Floor/Ceiling all-in rate to the loan contract for interest computation, as part of the batch activity.

Floor and Ceiling validation and propagation is done only for the active loans. Uninitiated loans are ignored. However, the validation and propagation happens during initiation of an uninitiated loan.

Floor and Ceiling validation and propagation is done only for current or back value dated transactions. System does not do any validation/propagation during the above mentioned online/batch activities if the value date of the transaction is in future.