Yes Sifiso,
Mifos X needs to have that calculation type (% Outstanding Amount) applicable for penalties. It’s a requirement with a number of institutions here asking for the same. Besides, the system needs to provide flexibility to serve the needs of MFIs. A good system is that which doesn’t force an institution to change their processes just to be accommodated by a system. James, You mentioned the possibility of having additional penalty configured, this isn’t possible in Mifos X either. We configured 2 penalty charges and all of them were applied same time which isn’t what is required. We wanted the first penalty charge which doesn’t have any frequency to charge then 7 days after applying this penalty we get the 2nd charge to be effected and the same charge needs to apply after every 7 days. Is there a way we can have 2 penalties configured but executed at different times? Will appreciate if we can get a solution to this to be able to meet the requirements of our clients. Regards; ******* Zayyad A. Said | Chairman & C.E.O Cell No.: +254 716 615274 | Skype: zsaid2011 Email: [email protected] Schedule Meetings: https://calendly.com/zayyadsaid Description: Email banner From: [email protected] [mailto:[email protected]] Sent: 07 May 2019 01:32 AM To: 'Mifos software development' Subject: Re: [Mifos-developer] Compounded Penalty I brought this issue up a year ago. It is important to have a penalty charge that is based on the outstanding balance. And that charges matured loans and not only Overdue instalments. This type of penalty charge is common in most parts of the world and confirms to international standards. Kind regards, Sifiso From: Zayyad A. Said [mailto:[email protected]] Sent: Saturday, 04 May 2019 4:30 PM To: [email protected]; 'Mifos software development' <[email protected]> Subject: Re: [Mifos-developer] Compounded Penalty Hi James, Thanks for your response. The client is based in Kenya and not regulated by the Central Bank of Kenya. The penalty terms are stipulated in the loan agreements that they sign with their customers and its upon the customer to accept them or not. The reason for compounding penalties according to them is to discipline the clients to repay their loans on time and their customers are fully aware of. They operate on short term basis and loans that are overdue by more than 30 days are written off and further recovery actions taken. Is there a way Mifos X could serve their need despite how usurious this practise may sound? Perhaps, we should think of creating a new charge type to charge a % of outstanding balance as I had seen a requirement before where an MFI charges installment fee and the fee isn’t considered in calculation of penalty. Regards; ******* Zayyad A. Said | Chairman & C.E.O Cell No.: +254 716 615274 | Skype: zsaid2011 Email: <mailto:[email protected]> [email protected] Schedule Meetings: <https://calendly.com/zayyadsaid> https://calendly.com/zayyadsaid Description: Email banner From: James Dailey [ <mailto:[email protected]> mailto:[email protected]] Sent: 04 May 2019 12:05 AM To: Mifos software development Cc: Dev Subject: Re: [Mifos-developer] Compounded Penalty Hi Zayyad I usually don't comment on requirements because they are the domain of the user-organizations. However, my opinion is that Interest charged on Penalties is not ethical nor fair behavior and could land the organization in hot water with authorities or in the paper. Penalties are valid (if levied on behavior spelled out in the terms) Interest is valid But compounding Interest on penalties is different because it cannot be consented to by the consumer and has the potential to be quite usurious. I'd suggest finding a different mechanism, perhaps additional penalties or fees for clearly spelled out term violations. The main thing for consumer protection is to make the charges transparent and clear. <https://www.centerforfinancialinclusion.org/client-protection-in-india/> https://www.centerforfinancialinclusion.org/client-protection-in-india/ Has the organization consulted with Banking Codes and Standards Board of India? <http://www.bcsbi.org.in/> http://www.bcsbi.org.in/ or with Sa-Dahn or SMART campaign for guidance? We all lose when banks or MFIs make myopic decisions. <https://economictimes.indiatimes.com/blogs/et-editorials/penalty-on-customers-a-myopic-move-by-public-sector-banks/> https://economictimes.indiatimes.com/blogs/et-editorials/penalty-on-customers-a-myopic-move-by-public-sector-banks/ Thanks, James On Fri, May 3, 2019 at 1:14 PM Zayyad A. Said < <mailto:[email protected]> [email protected]> wrote: Devs, We have a requirement from one of our clients to charge Late Payment Penalty on compounding basis and to calculate as % of outstanding balance (including fees). Here is a practical scenario of how the penalty should be calculated on weekly basis: Principal: 10,000/= Interest: 200/= Fees: 485/= Penalty on Week 1: (10,000+200+485) * 1% = 106.85 Penalty on Week 2: (10,000+200+485+106.85) * 1% = 107.92 Penalty on Week 3: (10,000+200+485+106.85+107.92) * 1% = 109.00 Penalty on Week 4: (10,000+200+485+106.85+107.92+109) * 1% = 110.09 I configured a penalty charge using calculation method as % Loan Amount + Interest and I noticed the penalty calculated every week is 102/=, it doesn’t factor the fees of 485/= & also doesn’t compound. Kindly advise how we can configure this penalty to achieve what the client is looking for. I have tried both in version 18.03.01 and 17.07.01 and the behaviour is the same. Regards; ******* Zayyad A. Said | Chairman & C.E.O Cell No.: +254 716 615274 | Skype: zsaid2011 Email: <mailto:[email protected]> [email protected] Schedule Meetings: <https://calendly.com/zayyadsaid> https://calendly.com/zayyadsaid Description: Email banner Mifos-developer mailing list <mailto:[email protected]> [email protected] Unsubscribe or change settings at: <https://lists.sourceforge.net/lists/listinfo/mifos-developer> https://lists.sourceforge.net/lists/listinfo/mifos-developer
