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

Introduction to Deposits Loans Linkage Interest

Loans and Term deposits are defined as linkage or not linkage based. For CPI loans and deposits, parameters are defined in a parameter table; Foreign Currency (FCY) linkage parameters are defined at the product level (External property class).

When a new linkage loan is created for a customer, the linkage factor on that date is noted and taken as the base. There is no interest or principal correction on the first day of the loan. The CPI index is published once a month (for instance 15th of every month) and the same is updated in the local table.

Periodically, when the linkage changes, the corrected interest projection as on the EMI schedule due date and principal projection on the outstanding (o/s) principal amount is calculated. The Principal and Interest correction is calculated on the next EMI schedule due date. The correction amount can be positive or negative, depending on the upward or downward movement of the index. The Interest and Principal correction are charged separately and does not affect the Loan principal and interest schedule.

In the case of FCY linked index, the index is dependent on exchange rates which can change daily, and therefore, a correction amount is to be calculated on the schedule due date based on the daily exchange rate from the schedule start date to end date.

On the scheduled repayment dates of the loan, the correction amount is either debited or credited from the customer’s account. A similar mechanism is applicable for deposits.