11.2.8.1 Rate Revision / Rate Fixing / Rate Changes

You can do rate revision for liquidated contracts / liquidated schedules. This can be done by selecting the REVN of Liquidated Contracts option in Loans and Deposits – Branch Parameters screen.

For floating periodic auto type of loans, based on the rate changed for a rate code, the status of the revision schedule is updated as REPICK, provided that the effective date is less than or equal to the revision schedule maintained for that contract.

During the life cycle of a floating periodic auto loan, a contract can be linked to any rate code and it can be changed through a VAMI (Value Dated Amendment). After the rate code change, if the rate for the previous rate code is changed, then the interest is re-computed provided the effective date (for which the rate is being changed) of the rate code is less than or equal to the revision schedule date. This is applicable for liquidated schedules and liquidated contracts.

Only the schedule for which the rate revision is not applied is allowed for deletion. This is applicable despite the latest version of the contract is not floating periodic auto or floating auto.

In the batch if a rate revision impacts a schedule which is liquidated, then the schedules are adjusted automatically based on the net amount paid (Amount paid-Amount refunded- Amount reversed). The IRR is recomputed, if discount accrual is applicable for the product.

If a rate revision impacts a liquidated contract, then the schedules are built based on the net interest paid (Amount paid-refund amount-amount reversed).

Example

Consider a loan of 200,000 USD was given to AIRBUS on December 01,2007 with principal payment on every first of the month. The maturity date of the loan was 01-Feb-2008, Last payment was done on 01-Feb-2008 and the current scenario is depicted below.

Schedule date	Amount Due(USD)	Amount Settled (USD)
1-Jan-08	10,000.00	10,000.00
1-Feb-08	10,000.00	10,000.00

The contract status is now liquidated and the rate for the underlying rate code is changed for the effective date of 15-Dec-2007 such that amount due for the interest gets changed. As a result of the rate change, the system adjusts the liquidated schedules automatically. The scenario after the VAMI is depicted below.

Schedule date	Amount Due(USD)	Amount Settled (USD)
1-Jan-08	11,000.00	11,000.00
1-Feb-08	11,000.00	9,000.00

Rate change for Liquidated Schedules

Consider a loan of 200,000 USD given to AIRBUS on December 01,2007 with principal payment on every first of the month. The maturity date of the loan be 01-Mar-2008, Last payment was done on 01-Feb-2008 and the current scenario is depicted below.

Schedule date	Amount Due(USD)	Amount Settled (USD)
1-Jan-08	10,000.00	10,000.00
1-Feb-08	10,000.00	10,000.00
1-Mar-08	10,000.00	0.00

Current System date is 15-Feb-08 and now a back valued VAMI with a value date as 15-Dec- 2007 is done to increase the rate such that amount due for the interest gets changed. As a result of the VAMI the amount settled is adjusted automatically. The scenario after the VAMI is depicted below.

Schedule date	Amount Due(USD)	Amount Settled (USD)
1-Jan-08	11,000.00	11,000.00
1-Feb-08	11,000.00	9,000.00
1-Mar-08	11,000.00	0.00