1) Do they allow transfers of active loan account
Unknown macro: {/quote}
Currently we do, like described before we currently take the quite messy approach of leaving all old loans in the old branch and the active one gets fully migrated (including disbursement etc) to the new branch. This means these new branches sometimes have loans disbursed before they even existed. This is a very messy solution and is not acceptable from an accounting and audit perspective. The preferred one is listed as part of Question 2 ![]()
2) where to allocate the interest income on current outstanding loans, does everything go to the new branch, or only the remainder? and what happens with overdue interest etc. {/quote}
The preferred approach is to leave all journals in the old branch, and for cash based accounting just book all new ones to the new branch. This means that all transactions from the date of transfer go into the new branch. The remaining OLB of the loan should also be transferred to the new branch by a journal.
This works very well for Cash based Accounting but introduces some problems for Accruals, as you also have to deal with Interest receivable accounts (interest accrued but not yet paid).
Our solution to that would be to reverse all accrued but not yet paid interest/principal and transfer those to the new branch and from there on leave it there. But it might be good to also check if this is in line with what GK expects this to do as this is a quite controversial area where no-one seems to really agree on the best way forward.
From the portfolio side the ideal situation would be to show the loan as Closed - Transferred or something similar and make sure it reports OLB etc as 0, to still be able to see the loan in the old branch, but at the same time not get any negative reporting effect such as arrears etc.
|
