3.3.3 Ratio Method

This topic provides the information about the Ratio method for Interest calculation.

In this method, Interest is calculated at the individual account level based on the net pool position and the individual account balance. The interest debits and credits posted to the participants accordingly.

The system calculates the appropriate interest rate at the account level based on the following scenarios:

• If the Net Pool Position is positive and the individual account balance is credit.

  Both Coverage Credit Interest and Residual Credit Interest should get accrued.

• If the Net Pool Position is positive and the individual account balance is debit.

  Only Debit Coverage Interest will get accrued.

• If the Net Pool Position is negative and the individual account balance is credit.

  Both Coverage Debit Interest and Residual Debit interest should get accrued.

• If the Net Pool Position is negative and the individual account balance is debit.

  Only Debit Coverage Interest will get accrued.

The Expression, Condition and Result needs to be maintained in the IC rule for processing Interest Ratio method of pooling in the system. please refer the IC Formulae section.