This module will not be further enhanced. Support is limited to defect fixing only.

Introduction to Subsidy Loans

The module covers subsidy loans which are loans wherein a certain portion of interest is subsidized, subject to governing rules. Interest subsidy loans can be granted for purposes like housing, agriculture and rural.

Under the Finnish regulations, the banks might be offered with subsidy for certain type of loans which can be in turn offered to their customers. Hence, the banks need separate products, which have subsidy to be offered to customers. This means that the bank has different methods of loan interest calculation and this document deals with the functional design of the interest calculation of loan products in such scenarios.

The Finnish regulation permits two different types of interest calculation for loans which are – the at least margin and reference rate plus margin. The regulation also permits subsidy for some loan products, which can be offered by the banks. This necessitates the banks to calculate the interest for applicable loan products.

A subsidy loan is a type of loan, which has several peculiarities, such as information from the loan decision of the authority e.g. information concerning the amount or the percentage of the subsidy, the payment scheme and the subsidy portion.

This module allows banks to add, modify, disable or remove the interest subsidy loan related templates into Temenos Transact. It also allows banks to calculate the interest subsidy to each loan based on the selected interest subsidy template.

The interest subsidy loan product offered by the Finnish banks and regulated by the Finnish law in terms of loan period, the interest subsidy template includes a deductible rate and customer liability.

The Central Approval Authority for the subsidy loans has laid out conditions on the minimum amount of loan that can be disbursed during the first and last installments. The bank’s users are warned when the loan amount is disbursed is less than the minimum percentage value as advised by the approval authority.

Also, the banks are able to define the maximum number of times a subsidy loan that can be disbursed. The user needs to be warned if it tries to disburse the loan in more than allowed number of disbursements as defined by the banks.

The following applications have been introduced with this module:

• The NORSIC.SUBSIDY.TEMPLATE application is used to create and maintain the interest subsidy related details which can be created based on different currencies and different dated versions. It is mapped to the XSUBSIDYLOANPRODUCT property class.
• The NORSIC.INVOICE.INTEREST.CODE application is used to store the loan purpose code for the State Treasury. The bank is allowed to add, delete or modify the purpose codes from this application.
• The NORSIC.INTEREST.CODE.MAPPING application is provided to map the Temenos Transact periodic index keys to state treasury interest reference rate codes.

The benefits of this module are:

• Ability to calculate the charged interest percent for normal loans based on various conditions like the interest calculation methodology, cap percent and floor percent.
• Ability to calculate the charged interest percent and interest subsidy percent for the subsidy loans based on various conditions like interest calculation methodology and subsidy amount granted by authorities.
• Define the Minimum first disbursement percentage, Minimum last disbursement percentage and Maximum allowed number of disbursements.
• Ability to change the templates on a loan: The user is able to change the default values defined at the product level, when a loan is created using the subsidy loan product.
• Ability to remove templates from a loan: The user is able to remove the default values defined at the product level, when a loan is created using the subsidy loan product.
• Removing a template from the system: The latest date record will be effective for the loan subsidy calculation.
• Ability to change the templates on a loan: The user is able to see the latest date defined in the subsidy template values, when a loan was created using the subsidy loan product.

Click here to understand the terms and abbreviations used in describing this module.