2.14 Drawing Power Based Facility

This topic describes about the detailed information on Drawing Power processing.

Drawing Power generally addressed as “DP” is used in banks and financial institutions. A firm or company can set a limit up to which they can withdraw from the working capital limit sanctioned by the bank. Customers submit monthly/quarterly closing stock statements which determine the banks updating of drawing power. The bank performs an important credit monitoring exercise by updating the drawing power for working capital.

Below steps depicts the processing of DP backed facility in Oracle Banking Enterprise Limits and Collateral Management

  1. Creation of DP backed Facility.
    • Specify if the facility is drawing power backed using the DP backed flag at facility.
      • DP backed facility can only be of revolving type and cannot be non-revolving or NRS.
      • DP backed facility can be a subline to a revolving line, or it can also be a mainline.
      • For DP backed facility, effective line amount basis must be Min (limit amount, DP amount).
    • Specify the last stock statement date as part of the stock statement submission process.
      • You can create a new DP backed facility with or without the last stock statement date.
      • Once you update the last stock statement date, for the facility, it cannot be made blank afterwards.
      • You can enter the last stock statement date as back dated or current dated but not future dated.
    • Specify the DP amount as part of the stock statement submission process and based on the last stock statement date.
      • Drawing Power field is provided to enter the DP amount.
      • You can create a new DP backed facility with or without the DP amount.

    Note:

    If you create a DP backed facility for the first time without specifying the last stock statement date, then
    • It is not required for user to enter value for DP.
    • User can only specify the limit amount for the facility. In this case, the DP amount will be defaulted to zero on save..
  2. Configuring days for zeroising facility in Global Parameter Maintenance.
    • In global parameter maintenance (GEDPARAM), the user sets the number of days for zeroising out the DP-backed facility.
    • DP amount will be zeroised after the configure number of since last stock submission date.
  3. Stock Statement Submission and processing at facility level.
    As part of the stock statement submission process, you can update the Last Stock Statement Date and DP amount in the facility screen considering the below scenarios.
    • When DP backed facility in available status.
      • If the new ‘Last Stock Statement Date’ entered is within the number of days configured for zeroising then the facility will continue to remain as available, and the effective line amount will be updated considering the new DP amount entered.
      • If the new ‘Last Stock Statement Date’ entered is outside the number of days configured for zeroising, then you will be shown an override message and on acceptance, the facility will continue to remain available on save. The facility will be made unavailable and DP amount will be zeroised as part of EOD batch process.
    • When DP backed facility in unavailable status.
      • If the new ‘Last Stock Statement Date’ entered is within the number of days configured for zeroising then the facility will be made available, and the effective line amount will be updated considering the new DP amount entered.
      • If the new ‘Last Stock Statement Date’ entered is outside the number of days configured for zeroising, then the facility will continue to remain unavailable, and the DP amount will be zeroised as part of EOD batch process.
    Sample Example of DP processing

    Table 2-158 Example of DP processing

    GEDPARAM Days for DP Zeroising
      60

    Table 2-159 DP Backed facility Creation

    Business Date Facility Type DP Backed Effective Line Amount Basis Limit Amount Last stock statement date DP Amount Effective Line Amount Facility Status
    01-Aug-2024 Cash Credit Revolving Yes Min (Limit Amount, DP Amount) 10000     0 Available

    Table 2-160 Stock Statement Submission Process -1 (within days for zeroising)

    Business Date Facility Type DP Backed Effective Line Amount Basis Limit Amount Last stock statement date DP Amount Effective Line Amount Facility Status
    01-Sep-2024 Cash Credit Revolving Yes Min (Limit Amount, DP Amount) 10000 20-Aug-24 8000 8000 Available

    Table 2-161 Stock Statement Submission Process -2 (outside days for zeroising)

    Business Date Facility Type DP Backed Effective Line Amount Basis Limit Amount Last stock statement date DP Amount Effective Line Amount Facility Status
    21-Oct-24 Cash Credit Revolving Yes Min (Limit Amount, DP Amount) 10000 20-Aug-24 0 0 Unavailable

    Table 2-162 Stock Statement Submission Process -3 (within days for zeroising)

    Business Date Facility Type DP Backed Effective Line Amount Basis Limit Amount Last stock statement date DP Amount Effective Line Amount Facility Status
    20-Nov-24 Cash Credit Revolving Yes Min (Limit Amount, DP Amount) 10000 28-Sep-24 7000 7000 Available

Parent topic: Limits