3.3.3 Managing Covenants

Procedure to Add, Edit, and Delete covenants for the collateral.

Figure 3-15 Enrichment - Configure - Covenants

Description of "Figure 3-15 Enrichment - Configure - Covenants"

1. To add new covenant, click the add icon.
   The Covenant Details screen is displayed.

   Figure 3-16 Covenant Details

   
   

   
   Description of "Figure 3-16 Covenant Details"

   
   

   For process Covenant Details, user can set up extra placeholder fields in the Maintenance screen. For more information on managing these placeholders, refer to the Maintenance User Manual.

   The system supports configuration of up to 20 fields each for the following data types:

   • Text
   • Numeric
   • Boolean
   • Date

   Each field type allows a minimum of 0 and a maximum of 20 fields per Covenant details, based on the requirements. These fields displays in the Covenant Details screen only if they are configured. If no additional fields are defined, the screen will display only the standard covenant details fields.

   For example, we maintained 20 additional fields each for text, numeric, boolean, and date.

   The Covenant Details screen displays.

   Figure 3-17 Covenant Details

   
   

   
   Description of "Figure 3-17 Covenant Details"

   
   
2. To link existing covenant, click the search icon and select the Covenant Code.

   The covenant codes maintained in the Covenant Maintenance screen are displayed in LOV.

   Upon selecting the Covenant Code, Covenant name, Covenant description and Classification type are defaulted.

3. To create new covenant, click the Click to add new covenant link and specify all the details.

   For field level information, refer the following tables.

   Table 3-13 Covenant Details - Field Description

   Field	Description
   Covenant code	Specify a unique code for the covenant to be created.
   Covenant name	Specify a name for the covenant to be created.
   Covenant description	Provide a brief description about the covenant.
   Classification type	Specify the covenant Classification Type as Internal and External.

   Figure 3-18 Covenant Details

   
   

   
   Description of "Figure 3-18 Covenant Details"

   
   

   Table 3-14 Covenant Details - Covenant Details - Field Description

   Field	Description
   Covenant type	Select the Covenant Type. The following options are available in the drop down list: Financial Non-Financial In case of linking existing covenant, you cannot modify the Covenant Type.
   Covenant Sub Type	Select the Covenant Sub Type from the drop down list. In case of linking existing covenant, you cannot modify the Covenant Sub Type.
   Notice Days	Specify the number of days before which the covenant tracking task has to be created.
   Revision Frequency	Select the frequency for reviewing the covenant, such as Quarterly, Monthly, Semi Annual, and Annual.
   Revision Days	Specify the number of days in which the covenant must be reviewed.
   Start Date	Specify the date on which the covenant becomes effective.
   End Date	Specify the date on which the covenant expires.
   Maximum Defer Days	Specify the number of days for which the covenant can be deferred.
   Grace Days	Specify the grace days.
   First Review Date	Spelect the first review date.

   Figure 3-19 Monitoring Information

   
   

   
   Description of "Figure 3-19 Monitoring Information"

   
   

   Table 3-15 Covenant Details - Monitoring Information Details - Field Description

   Field	Description
   Monitoring Information Details	Select the monitoring information. Monitoring information maintained in the Monitoring Information Maintenance module are displayed in the LOV.

   Figure 3-20 Formula Details

   
   

   
   Description of "Figure 3-20 Formula Details"

   
   

   Table 3-16 Covenant Details - Formula Details - Field Description

   Field	Description
   Variable	Select a Variable from the drop down list. The options available are Debt Asset Debt Ratio Asset Ratio
   Operators	Select the required operator from the available Operators.
   Custom Value	Provide a Custom Value for building formula, if required. You can also select another Variable.
   Build Formula	Click Build Formula. The formula is built and displayed below the formula box. The system also displays whether the formula is valid expression or invalid expression below the formula box. You must change the formula in case it is invalid expression.
   Target Type	Select the Target Type from the drop down list. The options available are: Value Percentage Ratio
   Covenant Check Condition	Select the Covenant Check Condition from the drop down list. The options available are: Greater than, Greater than or equal to, Between, Less than or equal to, Equal to, and Less than.
   Target Value	Specify the Target Value.
   Target Value 1, Target Value 2	If Between is selected as the Covenant Check Condition, Target Value 1 and Target Value 2 fields appear. You need to specify the range of target values.

   Note:

   You can use any number of variables and operators to build the formula based on your requirement.

   The system periodically derives the built formula with the values obtained from customer / customer prospect’s financial documents and validate it against the set target values based on covenant check condition.

   Figure 3-21 Others

   
   

   
   Description of "Figure 3-21 Others"

   
   

   Table 3-17 Covenant Details - Others - Field Description

   Field	Description
   Compliance Status	Select the current covenant Compliance Status of the party / collateral. The options available are: Met Breach
   Waiver Status	Select the Waiver Status from the drop down list. The options available are: Waive Waive all
   Last Check Value	Specify the target value observed during the last covenant check.
   Deferred Due Date	Specify the Deferred Due Date. The covenant review can be postponed till the mentioned date.
   Remarks	Capture overall Remarks for the covenant.

4. Click Create.
   Covenant details are added and displayed in the Enrichment - Configure - Covenants screen.
5. To edit the added covenant, select the covenant record and click the Edit icon.
6. To delete the added covenant, select the covenant record and click the Delete icon.
7. After performing necessary actions in the Enrichment - Configure - Covenants screen, click Next.
   The Enrichment - Configure - Documents screen is displayed.