Loan Charges Creation

Finflux supports two types of charges—fees and penalties. Fees are charged for services—for example, membership fees, loan disbursement fees, withdrawal fees. Penalties are charged to discourage clients from deviating from the terms of a product—for example, late payment penalty for a loan account, early withdrawal penalty for a fixed deposit account. 

It supports Loan charges, Savings & deposits charges and Client charges. 

Charges may be associated with a product. When an account is opened based on a product that charges have been associated with, the account will include (inherit) all charges that are associated with the product. In addition, charges that are not defined for a product may be associated with individual client accounts. 

In this section of the manual, you will know about different types of loan charges and how to create a loan charge.

The following steps need to be followed for creating loan charges on new UI:

1. Log-in to the instance with the user Id and password and you will land on the below screen.

Open

2. Click on ‘Charges’ option under ‘Admin Home’, then click on ‘Loan’ option under ‘Charges’ as shown.

Open

3. Once you click on ‘Loan’ option, you will get the below screen. Click on ‘Create Charge’ button to create a loan charge.

4. Once you click on ‘Create Charge’ button, you will see the below screen showing various options to choose from. Select any one loan charge and proceed.

• Cheque Bounce: When a check is presented for payment, and there are insufficient funds in the issuer's account, the check "bounces," meaning it cannot be honored and is returned to the recipient or the bank. In such cases, banks and financial institutions may charge various fees and penalties, which can vary depending on the policies of the specific bank.

• Foreclosure Charges: Gets charged on the foreclosure date.

• Insurance Fee: This term refers to a particular type of fee or charge associated with a loan that includes insurance coverage.

• Processing Fee: A processing fee for a loan is typically charged during the loan application process. It is a fee imposed by the lender to cover the costs associated with processing and evaluating the loan application. The processing fee is typically a one-time charge and is usually deducted from the loan amount disbursed to the borrower.

• Overdue Fees: Gets charged if there is an overdue, this is a penalty charge. 

5. When you select Insurance Fee, you will see the below screen. Fill all the mandatory fields as required. Finally click on 'Submit’ button.

• Name: A descriptive name for the charge. The name provided in this field will populate charge selection lists on applicable product and account forms.

• Currency: Select the currency to be used when the charge is applied. The product and charge currency must be the same to be valid. Set up multiple charges if the same charge is required for products set up in different currencies.

• Charge Calculation Type: Select the desired charge calculation type.

• Flat: Select Flat as charge calculation to charge flat amount.

• Amount: The value in this field is used with Charge calculation to calculate the amount to be charged to the client. Example: Apply a service fee of 25 rupees (flat calculation) monthly by transferring the funds from another account.

• % Disbursement Amount: Select % Disbursement Amount as charge calculation to calculate the charge amount based on the % of disbursement amount.

6. When you select Cheque Bounce, you will see the below screen. Fill all the mandatory fields as required. Finally click on 'Submit’ button.

8. When you select Processing Fee, you will see the below screen. Fill all the mandatory fields as required. Finally click on 'Submit’ button.

• Charge Time Type: Select the desired charge time type.

• Disbursement: Gets charged at the time of loan disbursement, provided amount gets collected from the Disbursement amount.

• Source of Collection: Collected from borrower.

• Collect in first installment: The provided amount gets collected in the first installment.

• Slab Based: Select Slab Based as charge calculation to calculate the charge amount based on the slab (with respective repayments number and Installment amount).

8. When you select Foreclosure Charges, you will see the below screen. Fill all the mandatory fields as required. Finally click on 'Submit’ button.

9. When you select Overdue Fees, you will see the below screen. Fill all the mandatory fields as required. Finally click on 'Submit’ button.

• Add Fee Frequency: Enable this checkbox to apply fee frequency. 

• Charge Frequency: This field is enabled on enabling "Add Fee Frequency". Following are the drop-down options based on which the charge will be applied.

1. Days - It will divide the amount by 365 days. Example: If we give charge amount as "5", (5/365) *(number of days)

2. Weeks - It will divide amount by 52 weeks. Example: If we give charge amount as "5", (5/52) *(number of weeks)

3. Months - It will divide amount by 12 Months. Example: If we give charge amount as "5", (5/12) *(number of months)

4. Years - It will divide amount by 365 days. Example: If we give charge amount as "5", (5/365) *(number of days)

5. Same as repayment period - It will divide amount by 12 months. Charge applied on due date. Example: If we give charge amount as "5", (5/365) *(1 days). This will calculate penalty based on average value when we do repayment early or late.

• Grace Period: Grace period is nothing but waiting period to apply the penalty.

• Penalty free period: Penalty free period is nothing but a period of time the client will be benefited without penalty even though the client has overdue. 
  Example: If the Penalty Free Period given as "4 days", After running the job system will not collect the penalty for 4 days.
  If First repayment date is on 01 February 2017, the first 4 days penalty will not be collect.
  For January 2017, 31 days - it will apply penalty only for 27 days.

• Penalty Grace/Free Period applicable for Case

Apply for First Overdue Installment

Case 1: When the Grace period is defined (for ex "6 days")
It will be applied only for 1st installment.
Example: Consider 1st installment as "01 February 2017" After running the job it will wait to apply the penalty up to 06 Feb 2017, from 07 Day the penalty will get applied.
From 2nd installment penalty will apply form 1st day of the month itself.

Case 2: When the Penalty free Period is defined (for ex "4 days")
Penalty will not be applied for 4 days for 1st installment.
From 2nd installment the penalty will be applied from 1st day of the month itself.

Case 3: When both Penalty free Period (For ex "4 days") and Grace Period (For ex "7 days") are defined.
For 1st installment the penalty will be applied from 8th day of the month and system will not apply penalty for 4 days.
From 2nd installment system will apply penalty from 1st day of 2nd installment itself.

Apply for each Installment

Case 1: When the Grace period is defined (for ex "6 days")
The system will start applying penalties for all the installments.
Example: Consider 1st installment as "01 February 2017" After running the job the system will wait to apply the penalty up to 06 Feb 2017, from 07th Feb 2017 the system will start applying the penalty.
From 2nd installment the system will start applying penalty from 6th day of the month itself.

Case 2: When the Penalty free Period is defined (for ex "4 days")
For each installment, the system will skip applying Penalty for 4 days.

Case 3: When both Penalty free Period (for ex "4 days") and Grace Period (for ex "7 days") are defined.
For all the installments the system applies penalty from 8th day of the month and 4 days penalty will be skipped as penalty free period is 4 days.

• Calculate penalty on current overdue

Disable: Whenever early or late repayment are done, the system will calculate penalty based on the average balance of the loan amount.
Say for an example, first repayment is on 01 February 2017, if we do repayment on 15 February 2017 for 1st 15 days, the system will calculate penalty for 10000(principal amount) and for remaining days it will calculate penalty based on the average balance.
Enable: It will calculate the penalty based on the current outstanding.

• Apply penalty For broken period: Whenever early or late repayments are done, with respect to the number of late/early days system calculates and applies the penalty.

Say for an example, the repayment is on 01 February 2017, but the repayment is done on 15 February 2017. For the first 15 days (number of late repayment days), the system will calculate penalty for 10000 (principal) amount later it will calculate for the remaining amount.

10. Once you click on ‘Submit’ button, you will see the below screen which confirms that loan charge has been successfully created. You will also get options to edit/clone the loan charge. When you click on the three dots present beside edit/clone, you will get option to delete and active/inactive the newly created loan charge.