1. Cash Flow Engine Reference Guide
  2. Cash Flow Dictionary
  3. Cash Flow Columns
  4. Current Gross Rate (CUR_GROSS_RATE
  5. Module Usage

8.2.34.2 Module Usage

When the Model with Gross Rates switches is turned on in the Oracle ALM Product Characteristics rule, or in the Transfer Pricing Rule, CUR_GROSS_ RATE is used to calculate forecasted cash flows. When switched on, the cash flow engine uses the record's CUR_GROSS_RATE for two calculations:

Amortization: When conventionally amortizing a record's balance with the Model with Gross Rates option selected, the Cash Flow Engine uses the CUR_GROSS_RATE as the customer rate. If the option is not selected, then the Cash Flow Engine uses CUR_NET_RATE as the customer rate for amortization calculation.

Prepayments: To determine the rate at which the customer prepays, the current customer rate must be compared to the market rate. If the Model with Gross Rates is switched on, then the customer rate is represented by the CUR_GROSS_ RATE. If the switch is not turned on, the CUR_NET_RATE is used as the current customer rate.

If Model with Gross Rates is used, the Oracle ALM cash flow engine uses the CUR_GROSS_RATE for gross interest cash flow (financial element 435) calculations. This means that the record amortizes and prepays according to the CUR_ GROSS_RATE, but the net cash flows associated interest income (financial element 430) are calculated from the CUR_NET_RATE.

Note:

Depending on the NET_MARGIN_CD value, interest income is calculated differently.

Following is an explanation of how Oracle ALM calculates CUR_GROSS_ RATE:

Before the NEXT_REPRICE_DATE, the Cash Flow Engine uses the CUR_GROSS_RATE from the detail record as the gross rate. At or beyond the NEXT_REPRICE_DATE, the cash flow engine matches the REPRICE_FREQ, INTEREST_RATE_CD, and the Reprice Date to the information contained in the Oracle ALM Forecast Rates Assumption Rule. This is to assign a Forecasted Base Rate. The MARGIN_GROSS is then added to this Forecasted Base Rate. Any rounding, rate caps/floors, and tease periods are applied and the resulting rate is applied to the record as the gross rate.

Note:

All term accounts require a valid CUR_GROSS_RATE.
  • For non-interest earning/bearing accounts, CUR_GROSS_RATE = 0.
  • For transaction accounts where the rate changes daily, based upon average balances, CUR_GROSS_RATE should be the spot rate at the time the extract program is run.
  • CUR_GROSS_RATE >= 0.
  • CUR_GROSS_RATE = MARGIN_GROSS + value of the index (IRC) that the account is tied to (assuming periodic/lifetime caps/floors, tease periods do not apply and rounding is taken into consideration).
  • CUR_GROSS_RATE should be validated while validating CUR_PAYMENT.