7.1.2 Facility Currency and Collateral Currency
This topic describes about the facility and collateral currency.
Section Title
Change in exchange rates between the Credit Line currency and the currency of the collateral.
When you update and authorize the exchange rates in the currency table, the system scans all the collateral linked to a line (bearing different currencies). The collateral contribution is then converted the into the line currency (using the latest exchange rates). After the conversion, the collateral contribution to the line is updated.
The calculated limit contribution of the collateral has to be linked to the pool. This pool containing the pool amount is linked to the Facility. Hence any revaluation at collateral level affects the pool amount.
Example
User have defined a line for Loans on 01 January 2008, 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. Let us say that the Loans line has been backed by Collateral ABC and its maximum contribution amount that can be linked to the limit is GBP 10,000.
(1 GBP= 2 USD)
Table 7-6 Collateral details
| Collateral code | Max. Collateral Contribution amount | Collateral CCY | Pool code | Pool CCY | Collateral Pool % linkage | Pool amt |
|---|---|---|---|---|---|---|
| ABC | 10,000 | GBP | Pool1 | USD | 100% | 20,000 |
Pool contribution to the line
Table 7-7 Pool contribution to the line
| Pool code | Pool CCY | Line code | Line CCY | Pool Line Linkage | Pool contribution | Line Avl amt |
|---|---|---|---|---|---|---|
| Pool1 | USD | Loans | USD | 100% | $20,000 | $120,000 |
On 01 February 2008 the exchange rates have changed. After the exchange rate revision has been changed and authorized, the revaluation process (online process) scans all the pools where this collateral has been linked and having the above exchange pair is revaluated.
(1 GBP= 1.5 USD)
Table 7-8 Collateral details
| Collateral code | Line Code | Max. Collateral Contributio n amount | Collateral CCY | Pool code | Pool CCY | Collateral Pool % linkage | Pool amt |
|---|---|---|---|---|---|---|---|
| ABC | Loans | 10,000 | GBP | Pool1 | USD | 100% | 20,00 0 |
Pool contribution to the line
Table 7-9 Pool contribution to the line
| Pool code | Pool CCY | Line code | Line CCY | Pool Line Linkage | Pool contribution | Line Avl amt |
|---|---|---|---|---|---|---|
| Pool1 | USD | Loans | USD | 100% | $15,000 | $115,000 |
The revaluation in both cases is triggered off automatically whenever there is a change in the exchange rates (that is, online process).
The process explained above is an online process wherein the change in the currency exchange rate immediately evaluates all the contracts and the collateral having this exchange pair with the facility currency. If at the Oracle Banking Enterprise Limits and Collateral Management Global Parameter maintenance, the option for Evaluate Currency during Offline (batch) has been selected then the currency revaluation as explained above is taken up as part of revaluation batch process.
Note:
Fixed exchange rate utilization transactions will not get picked up for currency revaluation, as revaluation is not applicable for the same.Parent topic: Currency Revaluation