2.2.29 Fee Recalculation Based on Backdated Transaction

This topic describes about the detailed information on recalculation of fees based on backdated transaction.

You can configure the system to recalculate already liquidated facility fee whenever a backdated transaction is posted with transaction date as current date and value date as back date. This configuration can be enabled by setting the value of FEE_ALC_FLAG field in GETM_PARAMETER table as Y. If this flag value is set as N, then the system will not recalculate fee for the already liquidated fee cycles. However, the concerned value dated balance will be updated based on back dated transaction.

Note:

  • FEE_ALC_FLAG setting in GETM_PARAMETER table is a one time activity. Bank’s can choose to recalculate the already liquidated fees or to not consider backdated transactions based on their requirement.
  • Refer Global Exposure Parameter Details topic in ELCM Common User Manual for information on configurations related to backdated transaction.
The backdated transactions considered for fee recalculation are:
  • Amendment to facility including sub-system changes impacting the facility level amounts in Facility screen (GEDFACLT) with maintenance value date as back date
  • Utilization transaction with value date as back date
  • Rate change (including signifying new rate and modifying existing records) in fee preferences at facility level with effective date as back value date

Note:

  • For backdated transactions posted during the deferment period, fee which are deferred but yet to be liquidated will be recalculated and liquidated on the deferred date
  • For the period pertaining to current liquidation cycle, accrual will get recalculated from the last liquidation date
  • Facility level limit changes done with back value date by signifying maintenance val­ue date may result in change in slab/tier. For these amendments, appropriate rate/amount will be considered based on the new slab/tier while recalculating the fees.

Calculation of balances

  • Based on back value dated transactions, value dated balances of impacted amounts will be updated in addition to updating of book dated balances. Fee associated with such SDE will be recalculated
  • As book dated balance is considered for backdated transactions like utilization, exchange rate as on book date will be considered for cross currency transactions

Differential amount for already liquidated cycles

  • Separate entries (for both accrual and liquidation) will be posted for differential fee calculated for already liquidated cycles
  • Value date of such separate entries will be liquidation date of corresponding cycles with transaction date as current application date
  • Differential fee accrual entries are posted for each liquidation cycle
  • Separate entries for current cycle accrual based on back dated transactions will be posted based on accrual frequency
  • Irrespective of liquidation mode, the adjustment entries will get force posted as part of facility fee liquidation batch

Accounting

  • Separate accounting entries (Increase/decrease) will be posted for each liquidation cycle for each fee rule with value date as liquidation date and book date as current date
  • All recalculation related fee entries will be force posted
  • If accrual is daily, accrual entries will be matched with liquidation frequency for backdated transactions. For example, if the liquidation cycle is monthly and accrual is daily, differential accrual for already liquidated cycle will be consolidated and posted monthly.
  • For completed cycles, approach for advance fee is same as that of arrear fee
Example: If facility is created on 1st January with two fees (one advance fee and one arrears fee with percentage), liquidation cycle is monthly, and accrual is daily as below:
Facility Start Date 1st January    
Monthly fee dates 1st January 1st February 1st March
Advance fee amount liquidated 1000 1100 1050
Arrears fee amount liquidated   2200 2100
Accrual entries daily (for these liquidated fee)      
On 10th March, accrued amounts till date will be:
Current Business date 10th March
Advance fee accrual amount 300
Arrears fee accrual amount 700
If back value dated transaction is done on 10th March with value date as 10th January, already liquidated fee will be recalculated and differential amounts (liquidation cycle wise) will be:
Value date of backdated transaction 10th January    
Value date of differential fee liquidation transaction 1st January 1st February 1st March
Resulting differential fee amount - Advance 200 300 350
Resulting differential fee amount - Arrears   700 800
Differential fee accrual entries for liquidated cycles with value date will be:
Value date of different fee accrual - advance 31st January 28th February  
Different fee accrual amount 200 300  
Value date of different fee accrual - arrears s 1st February 1st March
Different fee accrual amount   700 800

Differential accrual for current cycle

  • For the period from 1st March till 9th March, arrear/Advance fee differential accrual will be posted daily for different value dates with transaction date as 10th March.
  • For advance fee, posting of backdated transaction with value date in the current cycle will result in recalculation and posting of accrual entries.

Parent topic: Facilities Maintenance