1.16 Maintain Floating Rate Input

This topic explains systematic instructions to maintain LD MM floating rate input.

The Interest Rate Type of a product can be one of the following:
  • Fixed
  • Floating
  • Special

A floating rate corresponds to the market rates for the day. These rates are maintained and updated daily (or whenever they change) in the Floating Rates Table. The rates can be applied on a contract with or without a spread. Through the Floating Rate Input screen, define floating interest rates

  1. On Homescreen, type CFDFLTRI in the text box, and click Next.
    The Floating Rate Input screen displays.

    Figure 1-19 Floating Rate Input

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    Description of the illustration cfdfltri__cvs_main-1.jpg

  2. On the Floating Rate Input screen, specify the fields.

    Note:

    The fields, which are marked with an asterisk, are mandatory.

    For more information on fields, refer to the field description table.

    Table 1-22 Floating Rate Input - Field Description

    Field Description
    Rate Code Click Search and specify the rate code to identify the floating rate being defined from the list of values. The list displays all valid rate codes maintained in the CFDFRTCD (Rate Code Definition) screen.
    Branch Code The system displays the branch code.
    Description The system displays the description of the rate code.
    Quote Basis for Loans Select the quote basis for loans from the drop-down list:
    • Per Annum
    • Exponential-252
    • Linear-360
    • Exponential-365
    Propagate Floating Rates To Branches Check this box to propagate floating rates to branches.
    Currency Code Click Search and specify the currency code.
    Amount Slab For a specific Rate Code and Currency Code combination, define an amount slab structure for the application of interest rates. Specify the upper limit of the slab to which a particular rate should be applied. A rate that has been defined for an Effective Date - Amount Slab combination will apply to an amount less than or equal to the specified amount. Define interest rates for a slab structure.

    For example, Let us extend the example discussed for Rates and Effective Dates to include amount limits. Refer to the table unresolvable-reference.html#GUID-EFF0F057-51E2-44AD-98D7-8B77B359FB18__TABLE_HXL_NPZ_1TB.

    If the rates have to be applied on 01 January 1997, they will be picked up as follows:
    • For a deposit with an amount less than or equal to USD 10, 000, the rate will be 12.5%.
    • For a deposit with an amount greater than USD 10,000 and less than or equal to 50,000, the rate will be 13%.
    • For a deposit with an amount greater than USD 50,000 and less than or equal to USD 999.9 million, the rate applied will be 14%.

    Note:

    A huge amount (999.9 million) has been given as the last amount limit. This denotes that after 50,000 there is no upper limit in the slab. Further, if the component amount is greater than the highest slab, the appropriate rate for the highest amount slab will be applied. Similarly, if the component amount is lesser than the lowest amount slab, the appropriate rate for the lowest slab will be applied.
    Effective Date Click Calendar and select the effective date. Each rate that is defined for a Rate Code and Currency Code combination should have an Effective Date associated with it. This is the date on which the rate comes into effect. Once a rate comes into effect, it will be applicable till a rate with another Effective Date is given for the same Rate Code and Currency Code combination.
    The following example illustrates this point:

    Note:

    The rates will be applied to a contract depending on whether it has been defined with Auto Rate Code Usage or Periodic Rate Code Usage. Specify this in the product ICCF Details screen.
    Borrow Lend Indicator Select the Borrow/Lend indicator from the drop-down list:
    • Borrow
    • Lend
    • Mid
    For every Amount Slab - Effective Date combination, define the rate to be applied as the Borrow rate or the Lend rate. There is also an option to specify the Mid rate.
    Tenor To Specify the Tenor To.
    Units Specify the Units from the drop-down list.
    Interest Rate Specify the Interest Rate.
    Picked Up Rate Code Specify the Picked Up Rate Code.

    Table 1-23 Rates and Effective Dates across Amount

    Amount (USD) Effective Date Interest Rate
    10,000 01 January 1997 12.5%
    50,000 01 January 1997 13.0%
    999.9 million 01 January 1997 14.0%
    Rate Code - TERMDEP45 and Currency - US Dollar

    Table 1-24 Rates and Effective Dates

    Effective Date Interest Rate
    01 January 1997 12.5%
    14 January 1997 12.0%
    31 January 1997 13.0%
    These rates will be applicable as follows:

    Table 1-25 Period and Rates

    Period Interest Rate
    01 January to 13 January 1997 12.5%
    14 January to 30 January 1997 12.0%
    31 January to one day before the next date 13.0%
  3. Click Exit to end the transaction.

Parent topic: Core Maintenance