7.9.6 Specifying Schedules for a Loan with a Fixed Interest Rate

You can define a revision schedule for a component of a deposit for which you have defined a fixed rate of interest. The revision schedule can be brought into effect when you change the fixed rate through an amendment.

You can specify the revision schedule for the interest component in the Contract Schedules screen. You must select R in the Rev field to indicate that the schedule being defined is a revision schedule for the component.

The schedules defined for each component at the time of product definition apply to the loan. However, you can change the frequency, number, unit and the start date to suit the specific requirements of the loan that you are processing. You should specify the amount only if the schedule being defined involves the principal component or a special interest.

The amount for interest, commission and fee components (if they are rates) are calculated by the system automatically, depending on the start date, number of schedules, frequency and repayment amount of the principal. However, an amount can be entered here for interest only if the Interest Calculation Method has been defined as Special. The fee amount can be input only if it is a flat fee.

For a loan, you can define repayment schedules that:

• Fall due at regular intervals
• At irregular intervals

Now, if you want to define schedules that fall due at regular intervals, all you have to do is, for a component specify the start date, the frequency, the unit and the principal amount. Since you would have already registered the Maturity Date of the loan (for a fixed maturity type), in the Contract Details screen, the schedules would automatically be spread out into equal intervals.

Based on this information, the system calculates the dates on which the repayments or interest revisions fall due.

Example

Consider the following details for a loan.

A loan of USD 100,000 comes into effect on 1 January 1998 and matures on 31 October 1998. Suppose you want to have 10 monthly schedules for principal repayment, you have to specify the Start Date as 31 January 1998, the frequency as monthly, the unit as 1, and the principal amount as 10,000. The schedules would be spread out over 10 months and would fall due every month-end.

Now, you have a 15-month loan beginning 1 January 1998 and ending 31 March 1999. Suppose, you want to define four quarterly schedules and three monthly schedules for principal repayment of this loan. These are irregular schedules and the Number field assumes importance here.

Here, for the component principal, you have to give the Start Date as 31 March 1998, the frequency as quarterly and the unit as 1. The number of such schedules will be four. Hence your quarterly schedule dates are calculated as:

• 31 March 1998 (Start Date)
• 30 June 1998
• 30 September 1998
• 31 December 1998

You have to specify for the same component - the principal - the Start date as 31 January 1999, the frequency as monthly, the unit as 1, and the number as 3, if you want to fix three monthly repayment schedules after 31 December 1998. They will be calculated as falling due on:

• 31 January 1999
• 28 February 1999
• 31 March 1999