1.9.7 Interest Details

This topic explains the Interest Details fields.

Specify the Interest Details fields.

Table 1-21 Interest Details - Fields Description

Fields	Description
Rate Type	The rate type applicable for the product, that the contract involves, is displayed here. It can be one of the following: Fixed Floating Special You can change the rate type from ‘Floating’ to ‘Fixed’ or vice-versa during the tenor of a contract. The schedules will be recalculated based on the new interest rate. If you change the rate type from ‘Fixed’ to ‘Floating’ and the revision method is ‘Periodic’, the system will default the rate revision schedule from the product. If the interest is a fixed amount and not a percentage of the principal amount, the rate type will be 'Special'. In this case you must specify the fixed amount for the contract in the ‘Interest Amount’ field.
Rate Code	If the Interest Rate Type (previous field) has been specified as Floating, indicate the Rate Code to which the product has to be linked. Similarly if a fixed rate contract has been linked to the deposit product, you will have to specify a fixed rate contract here. The fixed rate identified for the main component of the linked contract will apply to the deposit contract also. The Rate Code corresponds to the rates, defined in the Floating Rates table, that have to be applied for the product. A Rate Code identifies a set of rates defined for a combination of Currency, Amount (if it is necessary) and an Effective Date. Select from the option list of Rate Codes and choose the one applicable for the product you are defining. The Rate Code can be changed during contract processing.
Interest Basis	This field indicates how the system must consider the tenor basis upon which interest is computed over a schedule or interest period, in respect of the interest component being associated with the product. The specification made for the specified interest class is defaulted in this field. You can alter the default, if necessary, and select the required Interest Period Basis from the drop down list. You can choose any of the following options:
Rate Code	Each Rate Code corresponds to a rate defined for a combination of Currency, Amount (if it is necessary) and an Effective Date. These details are maintained in the Floating Rates table. This rate will be applied to contracts involving the product. The Standard overnight RFR rate codes maintained from the core screen can also be mapped. Including the From Date: For all schedules, the period considered for interest calculation would include the start date and exclude the end date. Therefore, the value date of the contract is considered for interest calculation and the maturity date is excluded. Including the To Date: For all schedules, the period considered for interest calculation would exclude the start date and include the end date. Therefore, the value date of the contract is excluded, but the maturity date is included for interest calculation. Including both From and To Dates: The period considered for interest calculation would include both the value date and the maturity date. This means the following: For the first schedule, it would include the Value Date. Interest would be calculated for the Value Date For the last schedule, it would include the Maturity Date. Interest would be calculated for the Maturity Date Excluding both From and To Dates: The period considered for interest calculation would exclude both the value date and the maturity date. This is: For the first schedule, it would exclude the Value Date. No interest would be calculated for the Value Date For the last schedule, it would exclude the end date. No interest would be calculated for the Maturity Date
Grace Period for an Interest Component	The grace days that you specify for any level of interest in the Product ICCB screen will default to contracts entered under that product. For interest components of Level 1 or above and of ‘Overdue’ category, you can change the grace days for a particular contract, subject to the condition that grace days for a particular level do not exceed that for any successive level. The number of grace days for interest components of Level 0 and ‘Expected’ category will always be 0. You can change grace days and/or rate for an interest component from value date amendment screen by triggering the events VAMB / VAMI. For any interest component, a change in grace days or rate can be back valued only as far back as the date of the last payment received.
Minimum and Maximum Rates	This field is applicable only for contracts using a product with Fixed Interest Rate Type. It indicates the minimum interest rate that can be applied on the deal, and the value is defaulted from the specification made for the product used by the contract. If the interest rate specified for a deal is less than this minimum rate, this rate will be applied on the deal. It indicates the maximum interest rate that can be applied on the deal, and the value is defaulted from the specification made for the product used by the contract. If the interest rate specified for a deal is more than this maximum rate, this rate will be applied on the deal. By defining minimum and maximum rates for a fixed interest, you can ensure that your rates stay within the stipulated limits.
Fixed Rate	If the product involved in the contract has a fixed interest rate defined then at the contract the attributes defaults. The rate which gets defaulted from the product can be changed.
Acquired Interest	If the contract was already initiated when it was input, the interest amount that has been accrued should be entered here. The amount will be taken into account during the next liquidation cycle. You can make changes to the acquired interest through this screen.
Minimum Spread	This field is applicable only when the interest Rate Type is Floating. Specify the minimum spread that can be applied on a contract involving this Product and Component. If the spread specified during contract processing is less than the value in this field, this value will be picked up as the spread.
Maximum Spread	Specify the maximum spread that can be applied on a contract involving this Product and Component. If the spread specified during contract processing is greater than the value in this field, this value will be picked up as the spread.
Waiver	The attributes of an interest component that have been defined for a product will be applied on a contract involving the product. If, for some reason you do not want to apply the interest component for the contract you are processing, you can do so by checking this field. The interest will be calculated but it will not be applied on the contract. To amend a contract, you have to invoke the Contract Interest, Charge and Fee screen of the ICCB module through the Value Dated Changes function.
Consider as Discount	While defining an interest class for the bills module, you can use this field to indicate whether the interest component is to be considered for discount accrual on a constant yield basis. Checking this box indicates that the interest component is to be considered for discount accrual on a constant yield basis. If you select this option the interest received against the component is used in the computation of the constant yield and subsequently amortized over the tenor of the associated contract. Checking this option also indicates that the interest components are to be considered for calculation of the Internal Rate of Return.
Denominator Basis	This is applicable to the interest methods which have their interest basis set to ACTUAL i.e. 30(EURO)/ACTUAL, 30(US)/ACTUAL and ACTUAL/ACTUAL. Denominator Basis is used to specify how the month of February is treated when the denominator is 'Actual'. There are two types of denominator basis methods: Per Interest Basis – Here the computation would be done based on ACT/ACT–ISMA Interest Method. In this case, the '366 Basis' field will not be applicable Per Annum (A) – Here the interest calculation will depend on the value you specify for 366 Basis
366 Basis	This is applicable only if the Denominator Basis is set to 'Per Annum'. You can select one of the following values here: Leap Year Leap Date – computation would be done based on ACT/ACT–FRF Interest Method Note: In the ACT/ACT– ISMA Interest Method the Numerator would be Actual number of days between two interest dates. Denominator would be computed as the product of the number of times interest is to be received.
Interest Periods	This is applicable if the Denominator Basis is 'Per Interest Period'. Here you can specify the number of Interest periods (Schedules) in the financial year. Note: n the Money Market and Corporate Deposit product interest screens, the following fields allow negative value input if negative interest is allowed for the component: Default Rate Minimum Rate Maximum Rate