Chetan, As far as I understand things, this would not affect the effective rates for the Equal Principal Installment (Fixed Principal) or Declining Balance loans. This is because the interest is figured over the number of periods within a year (52 weeks or 12 months), so the exact number of days does not matter.
It will have an impact when working with Flat interest rate loans, as that¹s very dependent on the number of days. So if you change the settings, this will change interest rates (if you want to get the same amount in interest) by a little bit. I have calculations available for determining this. Ryan On 12/6/10 10:30 PM, "[email protected]" <[email protected]> wrote: > Ryan and all , > > I tried this by changing the config setting to 365 days. But it did not have > any impact on my repayment amounts. Not sure if this is one time setting which > needs to be done at the start of the MIFOS and does not have any impact if > changed later. > > Can someone confirm the behavior of this config value ? > > Thanks > Chetan > > > > From: Ryan Whitney [mailto:[email protected]] > Sent: Tuesday, December 07, 2010 2:41 AM > To: Mifos Users > Subject: Re: [Mifos-users] Interest Calculations for Loan Accounts - Declining > Balance Interest (EMI of Principal and Interest) > > Miguel, > > There is a configuration setting in Mifos to set the number of interest > bearing days to 360 or 365. Depending on how you set that configuration, it > should change how this feature calculates the interest. > > Ryan > > > On 11/30/10 10:21 PM, "Miguel Jóia Santos" <[email protected]> > wrote: > > Hi, > > At MIFOS webpage we see, for interest calculation for loan accounts, equal > monthly installment, the base days are 30/360 or 1/12. Can we possibly change > it to 30/365? > > http://mifos.org/functional-specifications/system-processing/interest-calculat > ions-loan-accounts > > Declining Balance Interest (EMI of Principal and Interest) > Declining Balance Definition: Interest is computed at periodic intervals on > the amount of the original principal that has not yet been repaid. Since the > borrower only pays interest on that amount of original principal that has not > yet been repaid, interest paid is smaller every period. However, to make sure > that the borrower sets EMI, the formula is: > EMI formula: > EMI = i*P / [1- (1+i)^-n] > Where, > P = Loan amount > r = Rate of interest per year > n = Term of the loan in periods > l = Length of a period (fraction of a year, i.e., 1/12 = 1 month (or 30/360), > 14/360 = bi-weekly.) > i = Interest rate per period (r*l) > Regards, > > > Miguel Jóia Santos > Consultor/Gerente > > SBS - Soluções em Banca e Seguros > Insurance and Banking Solutions > cell: +258 823000231 > cell: +258 847141055 > telefax: + 258 21302599 > > > > ------------------------------------------------------------------------------ > Increase Visibility of Your 3D Game App & Earn a Chance To Win $500! > Tap into the largest installed PC base & get more eyes on your game by > optimizing for Intel(R) Graphics Technology. Get started today with the > Intel(R) Software Partner Program. Five $500 cash prizes are up for grabs. > http://p.sf.net/sfu/intelisp-dev2dev > > > _______________________________________________ > Mifos-users mailing list > [email protected] > https://lists.sourceforge.net/lists/listinfo/mifos-users > > -- > Ryan Whitney > Mifos Technical Program Manager > [email protected] > Mifos® - Technology that Empowers Microfinance (www.mifos.org) > Our mission is to enable the poor, especially the poorest, to create a world > without poverty. > <http://grameenfoundation.org/take-action/ingenuity-fund-challenge/> > P please consider the environment before printing this e-mail.
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