Comments in Purple (sorry, I know this is bad mailing list etiquette)
To analyse this issue, I have created 4 loan products to
simulate different scenarios related to the loan schedule start date
calculation (On a previous version of Mifos before implementing the loan
schedule independent of meeting schedule feature):
1/ A loan which interests are not deducted at disbursement: the
first repayment date is different from the loan disbursement date.
2/ A loan which interests are not deducted at disbursement but
on which fees deducted at disbursement are applied: the first repayment
date is also different from the loan disbursement date.
3/ A loan which interests are deducted at disbursement: the
first repayment date is the same as the loan disbursement date.
4/ A loan which interests are deducted at disbursement and on
which fees deducted at disbursement are applied: the first repayment
date is the same as the loan disbursement date.
>A question:
>We also have fees that can be charged at time of disbursal.
Does the scenario you describe below also apply then?
Based on the above cases, it is obvious that fees applicable to
loans and deducted at disbursement don't follow the same logic of
interests when calculating the loan schedule start date.
Nesrine,
Thanks for doing this analysis! I've added a link to this email
thread to this section of the functional spec:
http://mifos.org/knowledge/functional-specs/loans#repayment-schedule
We will be updating the spec for v1.1, and will include
clarifications around the scenarios you just researched.
>My recommendation would be the following:
>If "interest deducted at disbursement" is ON, then the system
should consider the second payment as the "first repayment" and apply
the logic for scheduling the date of the payment accordingly. In some
ways-- >it really is the first repayment-- albeit only of principal
As a reminder: when implementing "loan schedule independent of
meeting schedule", we allow disbursal to happen on a non meeting day.
However, if interests deducted at disbursement attribute is turned on,
and if we keep the same logic which is having the first repayment date
the same as the disbursal date, we will have a loan schedule start date
different from the loan repayment days. That is why I think that we
should keep the same loan schedule start date whether interest deducted
at disbursement are applicable or not. I.e the loan schedule start date
is the first meeting from the disbursal date (which defined on the
feature specifications).
The only difference between having interest deducted at
disbursement or not will be obvious actually only at disbursement (The
amount of payment details on the disbursal page).
Moreover, I think that if we consider the second payment as "the
first repayment" as recommended, min and max (especially max) window
wouldn't have any sense. The calculation of the loan schedule start date
would be the same as if we have a grace period of one instalment.
So I'm not sure if I fully followed this. :-) What I think
you're recommending is this:
(*) The "Start Date" for loan schedules (regarldess of whether
or not interest is collected at disbursement) should be the first
repayment *after* the disbursal date. (Above you mention that it should
be the first meeting after the disbursal date, but if we have loan
schedule independent of meeting, shouldn't it be the first repayment
date?)
(*) If this happens, then the system would apply all the
configurations used to determine the next repayment day to that first
repayment after the disbursal date-- ignoring the interest paid at
disbursement.
(*) There would be other impacts too... for example, if a loan
is defined to have 10 installments-- then the repayment of interest
would not be considered an installment. instead, the loan would have 10
principal repayments.
I actually think this is the right approach and I don't like the
fact that Mifos currently considers the interest deduction as the "first
installment". However, I'm worried that this change is actually a very
significant change in the system. There's a lot of logic to think
through-- things like:
(*) How would the UI change on the Loan Repayment Schedule?
(*) Would there be any impact on how grace periods are handled
(probably not, but would have to research)
(*) And probably a lot of other issues I haven't thought of
I'm worried at making such a significant change given everything
else we're trying to do in this release. It seems very high-risk. I'm
wondering if there is an easier approach?
Right now, very few of the MFIs we've spoken with use "interest
deducted at disbursement". So if it's easier and if Enda doesn't need
this feature, I think it's OK if we disable "loan schedule independent
of meeting schedule" if interest is deducted at disbursement. Would
that be easier to implement?
Do you have any other ideas?
Nesrine-- I know you need to close out on this issue quickly--
so feel free to IM me if you need to discuss this verbally.
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