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http://mifosforge.jira.com/browse/MIFOS-5182?page=com.atlassian.jira.plugin.system.issuetabpanels:comment-tabpanel&focusedCommentId=70848#comment-70848
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Jakub Sławiński edited comment on MIFOS-5182 at 11/9/11 10:42 AM:
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Hi,
I looked more closely to this issue and it looks like a completely new type of
interest recalculation.
I don't think we should base it on the 'Declining Balance - Interest
Recalculation' type, because this type of interest calculation has its own
issues (for example it is not possible to pay interest in the early repayment,
so you cannot pay the whole instalments).
What do you think about implementing this new type of interest calculation
based on the normal 'Declining Balance'. The only thing that will be changed is
the early repayment of the next instalment:
- now all amount greater than due repays in the following order: next
interest, next principal, next interest, next ... (without any interest
recalculations)
- I propose, that all amount greater than due repays in the following order:
next principal, <interest recalculation for all next instalments>, next
interest. (so it will be not possible to pay more than two instalments in one
payment and the next instalments totals will be smaller than in the original
schedule).
What do you think about this? Does this meet your expectations?
was (Author: jslawinski):
Hi,
I looked more closely to this issue and it looks like a completely new type of
interest recalculation.
I don't think we should base it on the 'Declining Balance - Interest
Recalculation' type, because this type of interest calculation has its own
issues (for example it is not possible to pay interest in the early repayment,
so you cannot pay the whole instalments).
What do you think about implementing this new type of interest calculation
based on the normal 'Declining Balance'. The only thing that will be changed is
the early repayment of the next instalment:
- now all amount greater than due repays in the following order: next
interest, next principal, next interest, next ... (without any interest
recalculations)
- I propose, that all amount greater than due repays in the following order:
next principal, [interest recalculation for all next instalments], next
interest. (so it will be not possible to pay more than two instalments in one
payment and the next instalments totals will be smaller than in the original
schedule).
What do you think about this? Does this meet your expectations?
> 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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