Pramod - please see inline notes. . .
On Mon, Jan 11, 2016 at 3:27 AM, pramod conflux <pra...@confluxtechnologies.com
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wrote:
> Hi Dayna/Ed,
>
> Can you please clarify following open points?
>
>
> C-3 Percentage on Interest Charge Type for savings:
Please also see this issue for more background:
https://mifosforge.jira.com/browse/MIFOSX-1886
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> 1. Is this type of charge should have flat amount also?
>
Since this charge is being implemented for withholding tax purposes it only
needs to be a percentage-based amount. Dayna, correct a flat amount isn't
needed here. DAYNA: correct. a flat amount will not be used here
Then savings posting charge will be allowed only with %interest.
> 2. What should happen at accounting level on collecting this charge. Is
> this an income or liability? Need exact behavior
>
Dayna - this would be a liability account correct. Likely as Withholding Tax
Payable that get's credited when assessed and then becomes an expense when the
tax actually gets paid? DAYNA: The charge is collected from the customer,
goes into a Withholding Tax Payable account as an expense.
Why this will have entry in expense once it is recognized as liability? I think
at the time of interest posting itself system should made entry as expense for
charge amount. If not, then what should be the entries at the time of interest
posting (debit and credit account details): Debit customer account, credit tax
payable account
And also I am planning to add a new screen under organization like “Manage Tax
components” which has again 2 screens one is to group tax components and second
one is to create and manage a tax component. Any changes in the percentage will
reflect in all associated charges.
Adding an option to select a tax group while creating charge. With these
changes we can add any tax related percentages to any charge. But right now I
will use this only with savings charges.
Tax component fields:
1. Name
2. Percentage
3. Debit account type
4. Debit account (accounting related)
5. Credit account type
6. Credit account (accounting related)
> 3. What should happen for overdraft interest?
>
Pramod - could you point me to where we have support for overdraft interest? I
thought we weren't yet supporting it as it's been requested multiple times
(although we do collect overdraft interest on the GL side)
Dayna- when the time comes that we allow overdraft and apply interest
calculations, the overdraft amount actually becomes a loan (commonly named
overdraft line of credit). All standard loan rules for interest calculation
and repayment apply. We don’t need to create a new set of functionality,
Ed- Right now we are not supporting overdraft interest, but just considering in
case it comes what should happen?
>
>
>
>
> C-4 Interest Rate Charts based on Amount
> 1. Should amount and period based variations coexist together?
>
My initial take is yes to support both amount and period-based interest rate
charts on the same product. Dayna +1
Will allow both together (from UI will show both the fields)
> 2. If these values coexist then can system should allow either period or
> amount alone to create an entry in chart?
>
Yes - because I think there will be the need for products that are typical FDs
but want to have ability to charge higher interest and then there will be the
need for standard savings products that have sliding interest rate bands based
on amount without the requirement for a certain period.
> 3. if 2 entries in chart satisfies the condition to apply interest, then
> which one should have priority?
>
I would think that in practice in most cases, if two scenarios were being
applied, the amount-based one would have priority in that the interest rate
chart for amount would be higher than the period-based one, i.e. you would have
customers who have fixed deposit accounts but have the option to earn higher
interest if they have a higher balance.
I feel which has higher interest rate should be taken. But anyway I will write
validations to stop any overlapping in interest rates while defining the
interest rate chart.
> 4. Do we need to add a type to make these interest chats either period
> based or amount based or Hybrid of both?
>
I'm not sure on this one if they should be separate interest rate charts or
combined as a hybrid.
Ultimately though at the product level, to echo what I said in Point 2, there
should be support for savings product (not tied to a period so not FD or RD)
that you can have an amount-based interest rate chart (sliding interest rate
band) and then for the existing FD/RD deposits, there should be the ability to
add amount-based interest rate chart (i.e. sliding int think we might need a
new type that is just amount-based, we already have
I am just allowing both for now. there won’t be any type selection.
> 5. Right now throughout the account life cycle system is applying single
> interest based on total number of periods (not applying different interest
> rates for different periods). should this be same for amount based interest
> rates also?
>
Pramod, are you saying that for any one account, you could only have one active
period-based interest rate chart, i.e. if you set up a new interest rate chart,
that it wouldn't affect the existing accounts with the current interest rate
chart implementation?
Ed - Yes this will be stored at account level so even if there is a change in
product it won’t affect the account.
Existing Behavior:
For Fixed deposits and fixed period RD, system is applying interest rate based
on planned period.
For open period RD, system is applying interest rate based on current period
number. If interest rate changes due to period number, then system is posting
interest with new interest rate (all previously posted interest gets reversed
and new interest with modified interest rate gets posted for all the periods).
Should we follow same for amounts also?
For Fixed deposits and fixed period RD, system will apply interest rate based
on planned amount.
For open period RD, system will apply interest rate based on current deposited
amount. If interest rate changes due to deposited amount, then system will post
interest with new interest rate (all previously posted interest gets reversed
and new interest with modified interest rate gets posted for all the periods).
Perhaps we can discuss this further as I might be getting confused as to how
this applies to savings products vs FD/RD? Dayna +1
> 6. What is the meaning of average balance in case of RD and FD (as I
> know we will have a total deposit amount at submission time only)?
>
Dayna, in the correct FD and RD, couldn't the average balance go up if people
are adding additional deposits throughout the life of the FD (that is usually
permitted, correct?) Dayna: Yes, that is often times permitted, however, not
always and not as a rule.
Need more details.
The question of average balance vs. daily balance over the period would only be
applicable for general savings products and not FD/RD (this was discussed in
comments on: https://mifosforge.jira.com/browse/MIFOSX-668
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>
>
>
>
--
Ed Cable
Director of Community Programs, Mifos Initiative
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