Facility Currency and Utilization Currency

Facility Currency and Utilization Currency Consider that a change takes place in the exchange rate between the line currency and the currency of a contract utilizing the limit under the line. Due to this change in exchange rate revaluation takes place in two in the following two stages:

Stage 1 - Currency Revaluation occurs between utilized contract and the credit line of the facility.

In the Currency Rates Screen of the Core services module, you can maintain exchange rates for currency pairs that your bank deals with. Along with this exchange rate maintenance, you can also specify the Mid Rate and the Buy or Sell Spread for various currency pairs. After you update and authorize the new exchange rates, they become effective.

While defining a credit line for a facility, you have the option of maintaining currency restrictions for the line. If you do not specify currency restrictions for a facility, then contracts having currencies other than the facility currency, can utilize the limit under the credit line. The revaluation process is applicable for such a line.

If the above conditions hold good, then a change in the exchange rate triggers the revaluation process. The system calculates the Facility currency equivalent of all the contracts linked to the facility (using the new exchange rates) and updates the utilization and available amount under the line.

Example

User have defined a line for Loans, and linked the Liability Code Symphony Group to it. The credit limit assigned to the credit line is USD 100,000, the facility currency is USD. No currency restrictions have been maintained for the facility.

Table 7-1 Example

Liability code	Line code	Facility Limit	Facility Currency
Symphony Group	Loans	100,000	USD

On 01 January 2008 the following Loan contracts has been sent to Oracle Banking Enterprise Limits and Collateral Management system for utilization, which are linked to this Credit Line. At the time of saving these utilization details, the line utilization is computed based on the exchange rates as of the transaction date (that is, 01 January 2008) of these contracts. The following table contains the details.

Table 7-2 Utilization details

Loan Amount	Exchange Rate	Facility Currency Equivalent (USD)	Utilization	Availability
AUD 15,000	1.50	22500	22500	27500
DEM 2000	1.20	2400	2400	25100
GBP10,000	0.5	20000.00	20000.00	5100.00
INR 72,000	36.00	2,000	2,000	31000.00
Total			$46900.00	$3100.00

On 01 February 2008 the exchange rates have changed (now 1USD=1.6 AUD). After the exchange rate revision has been changed and authorized, the revaluation process (online process) scans the contracts linked to the line, converts the contract currency to the Facility currency (using the new exchange rates) and updates the line’s utilization and available amount.

The following table indicates these details:

Table 7-3 Facility currency

Loan Amount	Exchange Rate	Facility Currency Equivalent (USD	Utilization	Availability
AUD 15,000	1.60	24000.00	24000.00	26000.00
DEM 2,000	1.20	2400.00	2400.00	23600.00
GBP10,000	0.5	20000.00	20000.00	3600.00
INR 72,000	36.00	2,000.00	2,000.00	1600.00
Total			$4840 0.0 0	$160 0.00

Stage 2: Revaluation occurs between the facility and the liability which is linked to that facility.

Due to the currency revaluation between utilized contract and the credit line of the facility (as per Stage 1) there is a revaluation on credit limit utilized by the liability.

Considering the same example as in Stage 1.

You have defined a line for Loans, and linked the Liability Code Symphony Group to it. The credit limit assigned to the credit line is USD 100000.This liability is linked only to one Facility (or line code) Loans.

Initially before the change in the exchange rate the utilization of the liability is as shown in the table:

Table 7-4 Exchange rate the utilization of the liability

Liability Cod	Line code	Liability Limit	Liability CCY	Liability Utilization	Availability
Symphony Group	Loans	100,000	USD	$46900.00	$53100.00

After the change in the exchange rate between the line currency and the currency of a contract utilizing the limit under the line, due to this the utilization at the facility level is changed. Due to this change the utilization at the Liability level also gets changed as shown in the table below:

Table 7-5 Liability details

Liability Code	Line code	Liability Limit	Liability CCY	Liability Utilization	Availability
Symphony Group	Loans	100,000	USD	$48400.00	$51600.00