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Binny Gopinath Sreevas edited comment on MIFOS-5182 at 11/9/11 11:52 PM: ------------------------------------------------------------------------- Here are my answers: 1. User should be allowed to repay any amount (it could be a round number and may not match exactly a certain number of installments or it could even be the full principal outstanding). In this case, Mifos should calculate future interest for principal outstanding only 2. Mifos should take what was the outstanding balance as on the previous meeting date and compute interest for this amount at the given rate: 5th Apr - Balance outstanding = 50,000 Interest rate - 24% Monthly meeting (today is 5th May) - Interest = 50,000 * 24 / 12 Weekly meeting (today is 12th April) - Interest = 50,000 * 24 / 52 3. Let us call it "Declining Balance-Interest Recalculation based on Last Meeting Balances" The existing "Declining Balance-Interest Recalculation" should be called "Declining Balance-Interest Recalculation Based on Daily Balances" I am attaching an excel sheet (SampleLoanCalculation_MonthlyReducing.xlsx) with a sample calculation for monthly repayments. To include "Principal only grace periods", just F9-F11 zeros to denote 3 months grace period. Delete the value in H10 to see the original repayment schedule. Hope this helps. was (Author: binnygopinath): Here are my answers: 1. User should be allowed to repay any amount (it could be a round number and may not match exactly a cedrtain number of installments or it could even be the full principal outstanding). In this case, Mifos should calculate future interest for principal outstanding only 2. Mifos should take what was the outstanding balance as on the previous meeting date and compute interest for this amount at the given rate: 5th Apr - Balance outstanding = 50,000 Interest rate - 24% Monthly meeting (today is 5th May) - Interest = 50,000 * 24 / 12 Weekly meeting (today is 12th April) - Interest = 50,000 * 24 / 52 3. Let us call it "Declining Balance-Interest Recalculation based Balance as on Last Meeting" The existing "Declining Balance-Interest Recalculation" should be called "Declining Balance-Interest Recalculation Based on Daily Balances" I am attaching an excel sheet (SampleLoanCalculation_MonthlyReducing.xlsx) with a sample calculation for monthly repayments. To include "Principal only grace periods", just F9-F11 zeros to denote 3 months grace period. Delete the value in H10 to see the original repayment schedule. Hope this helps. > 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 > > Attachments: SampleLoanCalculation_MonthlyReducing.xlsx > > > 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 -- This message is automatically generated by JIRA. 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