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http://mifosforge.jira.com/browse/MIFOS-5182?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=70849#comment-70849
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Binny Gopinath Sreevas commented on MIFOS-5182:
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Jakub,
The future interests also need to be recomputed. For example, if current
outstanding was 10,000 and interest is 24%, if the current principal pre-paid
in current month is 4,000. Then the future interest for next month should be
only 120 (assuming monthly repayments) instead of 200.
If this can be met, then it will meed my expectations. And since it
automatically supports "Principal only grace periods" it will be perfect for me.
I was thinking along similar lines as you mentioned about the order of applying
payments. It would be good to have 2 configuration parameters which will state
the order in which payments will be applied. (not a trapdoor setting, but a
setting that can be changed any time)
a) CURRENT_DUES_PAYMENT_ORDER=fees,interest, principal
This means that any payment made for current dues will be applied in the order
of fees first, then interest and lastly principal
b) FUTURE_DUES_PAYMENT_ORDER=principal,interest
This means that any overpayment made will be applied in the order of principal
first and lastly principal (this also means that payment of future fees is not
allowed)
If FUTURE_DUES_PAYMENT_ORDER=principal
This means that over-payments will always be applied to principal only and
never to interest.
What do you think? This makes it configurable depending on the kind of
implementation needed.
> Declining balance with interest recalculation - need to support monthly option
> ------------------------------------------------------------------------------
>
> Key: MIFOS-5182
> URL: http://mifosforge.jira.com/browse/MIFOS-5182
> Project: mifos
> Issue Type: Improvement
> Reporter: Binny Gopinath Sreevas
> Priority: Major
> Fix For: Release 2.2.2
>
>
> Currently "declining balance with interest recalculation" does a daily
> interest recalculation. There is a need to have an option to do a "monthly
> interest calculation". Detailed requirement and example below:
> There are 2 loans (with monthly installments) which are handled as follows in
> real-life:
> Loan 1:
> February-2011 - Disbursed - 10,00,000 at 2% per month
> March-2011 - Interest paid - 20,000
> April-2011 - Interest paid - 20,000
> May-2011 - Loan repaid paid with interest - 10,20,000
> I schedule this as a loan product with interest type as "diminishing
> balance" and with 2 "principal-only grace" periods. This works fine in Mifos.
> Loan 2: Is similar, except that the customer does some prepayments.
> May-2011 - New Loan disbursed - 40,00,000 at 2% per month
> June-2011 - Interest paid - 80,000
> July-2011 - Interest paid - 80,000
> August-2011 - Interest paid - 80,000, Principal repaid 5,00,000
> (principal outstanding is now 35,00,000)
> September-2011 - Interest paid - 70,000, Principal repaid 10,00,000
> (principal outstanding is now 25,00,000)
> October-2011 - Interest paid - 50,000, Principal repaid 15,00,000
> (principal outstanding is now 10,00,000)
> Nov-2011 - Interest paid - 20,000
>
> I am not able to configure Loan-2 in Mifos. Ideally, the pre-payments should
> be adjusted to the principal. But mifos accounts prepayments against future
> interest, if I use interest type as "diminishing balance".
>
> If I use the interest type as "diminishing balance with interest
> recalculation", Mifos computes the interest based on daily-reducing balance.
> So the interest due for Feb, will be less than interest due for April. Which
> will not help implementing the above scenario. And with this type of
> interest, Grace periods are not supported. So it is impossible to implement
> such a loan in Mifos.
> My understanding of the solution in Mifos, will need 2 enhancements:
> a) Along with "daily declining balance with interest recalculation", we need
> a "monthly declining balance with interest recalculation"
> b) We need "Principal Only Grace periods" to be allowed for interest type
> "Declining balance with interest recalculation". Currently, Mifos does not
> allow this. There is already a ticket for this at: MIFOS-4742
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