BRD for Loan Management System

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 DOCUMENT REVISION HISTORY
Internal Review and Approval
Description of Details
Author Start Date
Ver. Version
By Date
No.
1.0 Initial Draft - -

Contents
1. Introduction 5
2. Purpose of the Document 5
3. Objective 5
4. Scope of the Document 5
5. Functional Requirements: Loan Management System 5

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5.1 Integration with LOS 6
5.1.1 Customer Onboarding through LOS API: 6
5.1.2 Loan Account Opening through LOS API: 6
5.1.3 Collateral Creation through LOS API: 7
5.1.4 Loan Disbursement through LOS API: 7
5.1.4.1 Loan Disbursement Dashboard: 8
5.1.4.2 Split Disbursement 11
5.1.5 Post Disbursal Document through LOS API: 12
5.2 Onboarding in LMS (Without API): 12
5.2.1 Customer Onboarding in LMS 12
5.2.2 Limits 14
5.2.3 Collateral Creation in LMS for Secured Loan 17
5.2.4 Loan Account Creation in LMS 18
5.3 Disbursement 20
5.4 LMS to Bank Integration for actual Disbursement 21
5.5 Bank Mandate Integration with LOS 22
5.6 Security Deposit Cheque’s Error! Bookmark not defined.
5.7 Welcome Kit 23
5.8 Mandate 23
5.8.1 Mandate Registration 23
5.8.2 Post Dated Cheque Maintenance 24
5.9 Interest Accrual 24
5.10 Billing and Repayment 25
5.11 Penal Interest 27
9.1 Charges 28
9.1.1 Charges Waiver 29
13.1 Loan Cancellation 29
13.2 Repayment Schedules 30
13.3 Lock-in period 31
13.4 Pre-Payments / Foreclosure 32
13.5 Moratorium - Reschedule and Restructuring 35
13.5.1 Loan Rescheduling happens when a Borrower wishes to make pre-payment
towards loan outstanding and opts to either change in loan tenure or change in instalment
amount. Rescheduling of loan repayments may happen under special or other
circumstances such as, 35
13.5.2 Loan Restructuring happens when a Borrower wishes to Reschedule ‘Repayment
Schedule’ if borrower is facing issues for Cash flows or any other reason due to which he
needs to extend the loan tenure or a reduction in Instalment amount or a change in Rate
of Interest (ROI) or Repayment Frequency. 36

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13.6 NPA Asset Classification and Provisioning 38
14.1.1 Categories of Asset Classification 39
14.1.2 Conditions to be satisfied to mark an account as NPA 40
Term Loans 40
14.1.2.1 Income Derecognition - Reversal of Income on Accounts Becoming NPAs 40
14.1.2.2 Income Recognition 40
14.1.3 Apportioning 40
14.1.3.1 Policy for Standard Assets (Overdue less than 90 days) 40
1. System should have a provision for all the collections to be adjusted towards settling
the cumulative default interest for all overdue months first. 41
2. System should have a provision for all the remaining collection to be adjusted in the
order of oldest overdue month to the latest overdue month. 41
14.1.3.2 logic for Secured NPA loans: 41
14.1.3.3 Apportioning logic for Unsecured NPA loans 41
14.1.4 Provisioning for different asset classifications. 42
Sample Voucher Entries 43
Reversal Sample Voucher Entries 43
14.1.5 Provision on restructured advance- to be added post discussion 43
14.1.6 Suit file of Accounts 43
14.1.7 Legal Diary 44
14.1.8 Write-off 44
14.1.9 Recovery After write-off 45

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1. Introduction
The Business Requirements Document (BRD) captures the business requirements and day-
to-day operations of Loan Management System and is a collaborative effort between all
Business and Technology stakeholders.

● Identifies and documents functional requirements for Loan Management System

● It covers all the modules and functionalities of Loan Management system.

2. Purpose of the Document

The purpose of the BRD is to communicate business needs in common terms to all
stakeholders and to ensure the product delivery meets the business objectives.

The BRD is the base document for development, configuration and testing the product.
SRS and SDD documents are to be created using BRD as a base.

3. Objective
The objective of this document is to list out all the Business Requirements of the Loan
Management System for NBFC.

This document articulates the key features and functionalities in addition to the Business
work flow of the Loan Management System.

4. Scope of the Document

● Business Process and Functional Requirement of Loan Management System for
Web Application.
● Internal and External Integration with Loan Management System
● Reports related to Loan Management System.

5. Functional Requirements: Loan Management System

Loan management system allows financial organizations to integrate the various touch-
points for servicing a loan after its disbursal. LMS supports various functions in the life
cycle of the loan such as customer service request for early closure of the loan, partial
prepayment of the loan or change of address and so on. It also supports periodic activities
required on the loan, such as due generation, income accruals, fee or expense
amortization, payment processing, late payment fee charging, non-performing asset (NPA)
identification and classification, loan rescheduling, loan down-sizing, loan restructuring,
fix-float conversion, post loan maturity activities and so on.

It is also a loan administration tool that allows data exchange/ reporting with other
systems in the bank eco-system, namely, but not limited to, core banking system,
corporate General Ledger accounting system, collections, debt recovery system, bank

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reconciliation, data warehousing and external agencies such as credit agencies/bureaus
and central bank/regulatory authorities.

5.1 Integration with LOS

Loan Management System shall provide API Interface for accepting following Details
information from LOS system. Below application details will get flow from LOS to LMS.

5.1.1 Customer Onboarding through LOS API:

1. System should flow following data from LOS to LMS for Customer Onboarding in LMS
and system automatically create Customer ID in LMS.
o Applicant Details- Details like Source, Customer Title, Customer Name,
DOB, Gender, Marital Status, Nationality, CKYC, EKYC etc.
o ID Details-Details like Passport, driving licence, voters' ID card, PAN card,
Aadhaar letter issued by UIDAI and Job Card issued by NREGA signed by a
State Government official.
o Personal Details- Details like Applicant Type, Constitution, Customer
Segment, Staff details Category, Preferred Language, Family details.
o Contact Details- Details like Email Id, Mobile No., Emergency Contact
Person Name, Emergency Contact Person Mobile No.
o Residential Address- Residential address of the Applicant
o Communication Address- Communication address of the Applicant
o Office Address- Office address of the Applicant
o Income- Customer gross and net income with income source.
o Documents – Documents uploaded for the Customer
o Branch Details – Base Branch, Customer Branch, Relationship Manager

2. System should have an option to search for Customer details with filters like
Customer ID, Customer Name, Mobile Number, PAN Number
3. System should have an option for Maker/Checker Operation User to view details of
Onboarded Customer from LOS in Customer Management Screen.
4. System should have an option for Maker Operation User to modify address, contact
(mobile/email) and document details of Onboarded Customer from LOS in
Customer Management Screen.
5. System should have an option for Checker Operation User to verify the modified
Customer Details
6. System should have an option for Checker Operation User to reject the modified
Customer Details
7. System should have an option for Maker Operation User to recheck the rejected
details and update the necessary changes to resubmit for verification. System
should have an option for Checker Operation User to reverify the Updated details

5.1.2 Loan Account Opening through LOS API:

1. System should flow following data from LOS to LMS for Loan Account Opening in
LMS and system automatically creates Loan Account Number in LMS.

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 o Product Details- Details like Product and Scheme details, Product
parameters
o Loan Details- Details like Sanctioned Loan Amount, Tenure (in Months) ROI,
EMI, Purpose of Loan, Interest Type-Fixed or Floating, fixed and floating,
etc
o Limit Details – Loan Account and Customer limit
o Disbursement Details- Disbursal Details like No. Of Disbursals, Disbursal
Amount, Date of Disbursals, Mode of Disbursement, Beneficiary Bank
Details, single or multiple disbursement details etc.
o Collateral Details- Details like Collateral Type, Subtype, Collateral Details,
Collateral Value, LTV, Owner Name etc.
o Repayment Details- Details like EMI Start Date, EMI End date, Repayment
Schedule, Repayment Frequency, Repayment Mode, Moratorium details etc.
o Charges - Initial Money Deposit details, Processing fees, Cersai charges,
Loan cancelation charges, pre-payment and foreclosure charges, penal
charges etc.
o MIS Details- Details like Sector, Sub Sector, Industry, Sub Industry, Purpose
of Loan
o Documents – All Documents collected and uploaded in LOS

2. System should have an option to search for Loan details with filters like Loan
Account Number, Customer ID, Mobile Number, PAN Number
3. System should have an option for Maker/Checker Operation User to view details of
the Loan Account Number in Account Enquiry Screen.
4. System should have an option for Maker Operation User to modify ROI, Repayment
Mode, Mode of Disbursement, Related Party Details (Co-Borrower/Guarantor), MIS
Details in Account Modify Function Screen.
5. System should have an option for Checker Operation User to verify the modified
Loan Account Details.
6. System should have an option for Checker Operation User to reject the modified
Loan Account Details.
7. System should have an option for Maker Operation User to recheck the rejected
details and update the necessary changes to resubmit for verification. System
should have an option for Checker Operation User to reverify the Updated details.

5.1.3 Collateral Creation through LOS API:

1. System should flow collateral details from LOS to LMS through Collateral API
(Collateral details will be stored in CMS database).
2. System should have an option to search collateral details using Application id,
Customer id, Loan Account Number.
3. System should be able to view the details like, Collateral Type, Collateral Sub-
type, Collateral details, Collateral Valuation, Collateral Ownership details.

5.1.4 Loan Disbursement through LOS API:

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 1. System should flow Loan Disbursement data from LOS to LMS through Loan
Disbursement API and system automatically generate the Disbursement Transaction
Posting Entry in LMS.
2. System should display all the Disbursement Loans in Loan Disbursement Dashboard.

5.1.4.1 Loan Disbursement Dashboard:

1. Loan Disbursement Dashboard should allow user to view details of Loans processed
and Disbursed from LOS.
2. System should display single or multiple disbursement details along with No. of
Disbursals, Disbursal Amount, Date of Disbursals, Mode of Disbursement,
Beneficiary Bank Details.
3. System should display disbursement schedule for multiple disbursements based on
no. of tranches defined in LOS.

Sample Disbursement Schedule for Single Disbursement

Sanction
Customer ID Loan A/C ID Customer Name
Amount
578942 300089710 Peter Parker 96,88,758.95

Disbursal Disbursal Disbursal Disbursal Disbursal Payment

Description Amount Date Status Details
Disbursal Payment
Peter Parker 50,00,000.00 23-12-2022 Entered
Details

Sample Disbursement Schedule for Multiple Disbursement:

Sanction
Customer ID Loan A/C ID Customer Name
Amount
578942 300089710 Peter Parker 96,88,758.95

Disbursal
Tranch Disbursal Disbursal Disbursal Disbursal
Payment
e No Description Amount Date Status
Details
Disbursal
1 BT 46,88,758.95 13-11-2021 Entered Payment
Details to Bank
Disbursal
2 Peter Parker 50,00,000.00 23-12-2022 Entered Payment
Details

4. Once operation user clicks Tranche No. link, System to navigate to Beneficiary
payment details to confirm the details of the payment with the beneficiary
bank account.

Sample Beneficiary payment details screen:

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Disbursal Disbursal Disbursal Disbursal Beneficiary
No Name Amount Date Account no
1 Kotak Bank 46,88,758.95 13-11-2021 2115478965

Beneficiary Payment Details

Disbursal To Peter Parker
Disbursal Date 13-11-2021
Payment Mode NEFT/RTGS/IMPS/UPI/DD/Cheque
Cheque /DD Date 16-12-2021
Bank Account ICICI000123456789
In favor of KOTAK Bank Loan Account no
2115478965
Remarks BT
Amount 4688758.95
Business Partner Name Peter Parker
FT Mode FT
Cheque /DD No 22244
Payable at Mumbai
IFSC Details KKBK000421
Effective Date 25-12-2021
Account No 2115478965
5. System should automatically post the loan processing fees and CERSAI charges
Voucher Entries during loan disbursement from LOS. If any charges partially or fully
waived off at loan appraisal and sanction level, same should display in disbursement
voucher posting.
Voucher Entries
Account Name Dr/Cr Amount
Peter Parker LN A/C Dr 25,00,000.00
Loan Proc Fee Cr 50,000.00
Cersai Charges Cr 12,000.00
CGST Payable Cr 5,580.00
SCGST Payable Cr 5,580.00
Net Disbursal to Bank
Cr 24,26,840.00
Account

Voucher Entries for Partial Processing Fee Waive Off. Processing Fee defined at
product level is 50000 calculated as per loan amount, waiver taken for 20000 and
collected 30000 as loan processing fee.
Voucher Entries
Dr/C
Account Name Amount
r
Peter Parker LN A/C Dr 2500000.00
Loan Proc Fee Cr 30,000.00
Cersai Charges Cr 12,000.00

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 CGST Payable Cr 2,700.00
SCGST Payable Cr 2,700.00
Net Disbursal to Bank Account Cr 2452600.00

Voucher Entries for Fully Waived Off Processing Fee. Processing Fee defined at
product level is 50000 calculated as per loan amount, waiver taken for 50000 and no
processing fee is collected.

Voucher Entries
Dr/C
Account Name Amount
r
Peter Parker LN A/C Dr 2,500,000.00
Loan Proc Fee Cr -
Cersai Charges Cr 12,000.00
CGST Payable Cr 1,080.00
SCGST Payable Cr 1,080.00
Net Disbursal to Bank Account Cr 2,485,840.00

For Multiple disbursement cases, system should collect the entire Processing Fee on
Sanctioned Loan Amount at the time of first disbursement.

6. System should automatically collect the calculated Pre-EMI instalment during

Disbursement for unsecured loans (This will depend on product parameters).
Voucher Entries - Pre EMI
Account Name Dr/Cr Amount
Peter Parker LN A/C Dr 25,00,000.00
Loan Proc Fee Cr 50,000.00
Cersai Charges Cr 12,000.00
CGST Payable Cr 5,580.00
SCGST Payable Cr 5,580.00
Pre EMI Cr 20,833.33
Net Disbursal to Bank
Cr 24,06,006.67
Account

7. System should not collect Pre-EMI instalment during Disbursement for secured loans
(This will depend on product parameters).

8. System should automatically collect the Insurance amount from Sanctioned amount
during disbursement.
Voucher Entries -
Insurance
Account Name Dr/Cr Amount
Peter Parker LN A/C Dr 25,00,000.00
Loan Proc Fee Cr 50,000.00

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 Cersai Charges Cr 12,000.00
CGST Payable Cr 5,580.00
SCGST Payable Cr 5,580.00
Insurance Payable
Cr 62,500.00
amount
Net Disbursal to Bank
Cr 23,64,340.00
Account

9. System should automatically collect the advance instalments during disbursement.

(This will depend on the product type and parameters)

Voucher Entries - Advance EMI

Dr/C
Account Name Amount
r
Peter Parker LN A/C Dr 25,00,000.00
Loan Proc Fee Cr 50,000.00
Cersai Charges Cr 12,000.00
Advance EMI Cr 25,000.00
CGST Payable Cr 5,580.00
SCGST Payable Cr 5,580.00
Net Disbursal to Bank Account Cr 24,01,840.00

5.1.4.2 Split Disbursement

Split Disbursement will have Single Debit and Multiple Customer Credit during
Disbursement Voucher Posting.

1. System should automatically post-split disbursement voucher entry in LMS based

on the instructions given in LOS system.

Sample Split Disbursement Voucher Entry:

Voucher Entries

Dr/C
Account Name Amount
r
Peter Parker LN A/C Dr
35,00,000.00
Loan Proc Fee Cr 70,000.00
Cersai Charges Cr 12,000.00
CGST Payable Cr 7,380.00
SCGST Payable Cr 7,380.00

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 Net Disbursal to Bank Account Cr 960,000.00
1
(Savings/Current Account)
Net Disbursal to Bank Account Cr 2,403,240.00
2
(DD/Pay Order)
Net Disbursal to Cash Cr 40,000.00

5.1.5 Post Disbursal Document through LOS API:

1. Basis the type of loan, System to auto populate post disbursal documents from
LOS.
2. All the list of documents which are uploaded from LOS should be viewed in PDD
screen.
3. System to display below document status against each document.
Status: Received/Completed/Pending/Waiver/Deferred
4. Sample list of documents attached for reference.

PDDDocuments.xlsx

5. System should have an option to upload the pending/Deferred documents.

System should also have an option to add new PDD document. Functionality of
the authentication will have both maker and checker facility.
6. Post the Checker validation, system to update status as completed.

5.2 Onboarding in LMS (Without API):

5.2.1 Customer Onboarding in LMS

1. System should have an option to create customer manually in LMS.
2. System should have an option to capture below details of the Borrower, Co-
borrower and Guarantor.
o Applicant Details- Should have an option to capture Details like Source,
Customer Title, Customer Name, DOB, Gender, Marital Status, Nationality,
CKYC, EKYC etc.
o ID Details- Should have an option to capture Details like Passport, driving
licence, voters' ID card, PAN card, Aadhaar letter issued by UIDAI and Job
Card issued by NREGA signed by a State Government official. System should
have an option to auto-populate the id proof details using OCR (Name,
Father Name, PAN Card number, DOB).
o Personal Details- Details like Applicant Type, Constitution, Customer
Segment, Staff details Category, Preferred Language, Family details.
o Contact Details- Should have an option to capture Details like Email Id,
Mobile No., Emergency Contact Person Name, Emergency Contact Person
Mobile No.

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 o Residential Address- System should have an option to capture Residential
address of the Applicant System should also have an option to auto-populate
the Address proof details using OCR (Aadhar).
o Communication Address- Communication address of the Applicant.
o Office Address- Should have an option to capture the office address.
o PEP – System to allow the user to enter PEP with Yes or NO. (PEP-Politically
Exposed Person).
o Risk Categorisation – System to allow the user to enter the classification with
Low/medium/High.
o Income- Should have an option to capture Customer gross and net income
with income source.
o Documents – System should have an option to upload documents for the
Customer.
o DSA- System to allow user to capture sourcing/DSA details in the system.
o Branch Details – Base Branch, Customer Branch, Relationship Manager.

3. System should have an option for Checker Operation User to Verify details of
customer Onboarded thorough Loan Management System.
4. System should have an option for Checker Operation User to reject the created
customer with appropriate reason/remarks.
5. System should have an option for maker to re-submit the rejected customer
details to checker for verification.
6. System should have an option for Maker Operation User to modify address,
contact (mobile/email) and document details of Onboarded Customer.
7. System should have an option for Checker Operation User to verify the modified
Customer Details.
8. System should have an option for Checker Operation User to reject the
modified Customer Details.
9. System should have an option for Maker Operation User to recheck the rejected
modified details and update the necessary changes to resubmit for verification.
System should have an option for Checker Operation User to reverify the
Updated details.
10. System should have an option/upload facility to upload bulk customers and
create customer id.
11. System should have an option to capture the KYC details for the different types
of non-individual customers (SME/Corporate)
Constitution types are:
o Public Limited Company
o Private Limited Company
o Unincorporated Association/Body of Individuals
o LLP
o Partnership company
o Proprietorship
o Trust/Society/Club
o Govt/Semi Govt
o HUF
o Section 8 companies
o Central/state govt dept/agency

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 o Artificial liability partnership
o Association of person/body of individual
o Liquidator
o Not Categorised
o Others

12. System to allow the user to enter the KYC details manually for the respective
constitution type. PAN Card and GSTIN of the corporate entity to be captured
mandatorily except. Basis the type of constitution opted, list of documents
would be listed in the screen and documents can be uploaded for further
verification.
13. System to allow the user to capture the Head Office, Regional Office, Branches,
Factory, and warehouse address. Mobile number, Office Number, and official
email to be captured for all the communication address.

5.2.2 Limits
1. System to have an option to define limit at group level.
2. System to have an option to define limit at Company or customer level parent
limit.
3. System should have an option to define fund-based sub limit.
4. System should have an option to define Non-fund-based sub limit.
5. System should have an option to capture secured limit and unsecured limit for
customer.
6. Sanction limit to be validated product wise before sanctioning. The sanction
limit should be on outstanding amount (Total liability of the loan). It needs to
be validated in LOS.
7. System should support concept of Parent Limits and sub limits (both FB and
NFB), the limit tree for a customer or group and LOS will refer this detail for
any sanctioning process from LMS.
for eg. Limit Tree Example

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 Group Limit
E.g. Group Company XYZ
Group Limit Sanction 100 cr.

Company B
Company A
Sanction Limit Sanction 50 cr.
Sanction Limit Sanction 50 cr.

Fund Based 35 cr Non-Fund Based 15 cr Fund Based 30 cr Non-Fund Based 20 cr

Term Loan CC / OD 25 Term Loan CC / OD 20

LC 10 cr BG 5 cr LC 10 cr BG 10 cr
10 cr cr 10 cr cr

● In this case borrower can draw any facility upto a maximum limit of INR 100 cr
or it may draw any product in combination only upto INR 100 cr.
● In case Fund Based limit, system should validate the drawing power / Sanction
limit, whichever is less, and allow limit utilisation only to that extent.
● If there is interchangeability between FB and NFB then, borrower can draw
either FB or NFB equal to INR 100 cr. (as per above example). However, system
should not allow/flag exception in case NFB is interchangeable with FB
● For each drawal from FB and NFB, System should validate the available balance
in limit currency and it should allow disbursement only upto available balance.
8. System should display Report of all accounts where limits nodes are renewed.
This report should give details like name of borrower, facility sanctioned, due
date of renewal and actual date of renewal, renewal approved by, date of
renewal.
9. System should have report to be generated for all the limit nodes expiring on X
number of months/days prior to expiry date.
Customer id, customer segment, customer portfolio, name of borrower, facility
sanctioned, date of original sanction, amount outstanding and due date of
renewal, accounts linked to limit nodes.
10. System should trigger an alert to be sent to RM for all the limit nodes expiring
on X number of days prior to expiry date. This will be customer RM/portfolio
lead.
11. System should provide a report of account where extension of Limit node is
done before renewal. This report should give detail like name of borrower,
facility, sanction amt, original date of sanction, due dt of renewal, limit
extended till, limit extended approved by, date of approval.
12. System should provide a report of accounts where limits nodes are not
renewed. This report should give details like name of borrower, facility
sanctioned, date of original sanction, amount outstanding and due date of
renewal.
13. Following limits to be maintained:

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 1. Product Wise limits- this can be based on sanction limit or outstanding.
each product can have its of definition of the same
The sanction limits
- all the Sanction limit of all the accounts opened in Finacle
- All the sanctioned happened but still account is not opened in LMS (Details
available in LOS)
- outstanding (product wise outstanding for all accounts under the product)
2. Customer wise limits- this tree structure will be created for a CIF and same
will be used for validation from LOS for approval.
3. Sector wise limits- this is sector wise limit are defined not to take a
exposure more than X% of total exposure
total exposure- for revolving facility this will be the sanction limit
for non -revolving facility - this will be the outstanding + unutilized amount
4. Subsector limits- this is subsector wise limit are defined not to take a
exposure more than X% of capital amount.
5. Industry wise limits- industry wise limits are defined not to take a exposure
more than X% of capital amount.
6. Group wise limits - Company group limit
7. Company limit - all the companies are defined not to take an exposure
more than X% of capital amount. This is a limit-maintained employer wise.
this should be validated at the time of account opening under a particular
product

14. System should not allow utilization of limits in case limits are already expired.
15. System should have an option to capture following details during limit creation:
● Parent Limit id
● Fund Based/Non-Fund based limit id
● Total exposure or sanction limit
● Drawing power
● Limit Sanction Date
● Limit Effective from
● Limit Expiry Date
● Limit Review Date
16. Once limit is created by maker user same should be available to checker user
for verification.
17. Checker user can reject the limit created by maker user.
18. System should have an option to maker user to edit the rejected entry and send
again for verification.
19. System should have an option to checker user to verify the maker entry.
20. System should have an option to modify the existing limit.
21. System should have an option to renew the existing limit.
22. System should have an option to link the collateral to limit.
23. System should have an option to inquire created limit details of the customer
using customer id, limit id, customer name.
24. System should have a limit tree or lookup option to view the overall limit
details.

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 5.2.3 Collateral Creation in LMS for Secured Loan
1. System should have separate menu option for Collateral creation.
2. Add Collateral – System should allow the user to capture the Collateral details
in Collateral screen and create collateral id.
3. All collaterals which are created in LMS should be maintained in CMS.
4. Collateral details linked to existing facilities to be pulled out from the
Collateral Management System. And same will be used for LTV calculation.
5. System should display existing collaterals utilised and remaining value.
6. System should allow to link existing collateral to new application of the same
customer.
7. Collateral ID, LTV, Collateral Type and Sub-type will be displayed in the
collateral details.
8. The loan amount financed should not be greater than the valuated amount of
the collateral.
9. System to calculate LTV amount basis the collateral value and product type.

Collateral Type and Sub Type:

Collateral Type Collateral Sub Type

Land & Buildings RS - Residential -> SOCP: Self Occupied
RS - Residential -> RN: Rented
RS - Residential -> VC: Vacant
RS - Residential -> UC: Under Construction
CM - Commercial -> SOCP: Self Occupied
CM - Commercial -> RN: Rented
CM - Commercial -> VC: Vacant
CM - Commercial -> UC: Under Construction
MX - Mixed -> SOCP: Self Occupied
MX - Mixed -> RN: Rented
MX - Mixed -> UC: Under Construction
IF - Industrial/Factory -> SOCP: Self Occupied
IF - Industrial/Factory -> RN: Rented
IF - Industrial/Factory -> UC: Under Construction
LN - Land -> FN: Fenced
LN - Land -> OP: Open
LN - Land -> RE: Residential
LN - Land -> CM: Commercial
LN - Land -> MX: Mixed
LN - Land -> AR: Agricultural converted into residential
LN - Land -> AC: Agricultural converted to commercial
LN - Land -> AI: Agricultural converted into institutional
LN - Land -> DC: Deemed Converted
LN - Land -> UC: Under construction (Field for stage of construction
and expected date of Completion)
IU - Institute - > SH: Schools

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 IU - Institute - > CL: Colleges
IU - Institute - > CC: Call centres
IU - Institute - > IT: IT companies
IU - Institute - > HT: Hotels
IU - Institute - > RT: Restaurants
IU - Institute - > HO: Hospitals
IU - Institute - > NH: Nursing Homes
IU - Institute - > OT: Others
IU - Institute - > UC: Under construction (Field for stage of
construction and expected date of Completion)
OT - Other - > OT: Other
Home Loan HL - Home Loan - Under Construction
HL - Home Loan - New Purchase
HL - Home Loan - Resale
HL - Home Loan - Home Expansion
HL - Home Loan - Self Construction
HL - Home Loan – Top up Loan
Plant & D - Domestic - > ND - New
Machinery
D - Domestic - > RB - Refurbished
D - Domestic - > RF - Refinance
I - Imported - > NI - New Imported
I - Imported - > RI - Refurbished Imported
I - Imported - > RF - Refinance
Motor Vehicles MV - Motor Vehicles - > NC - New Car
MV - Motor Vehicles - > UC - Used Car
MV - Motor Vehicles - > NC - New 2-Wheeler
MV - Motor Vehicles - > UC - Used 2-Wheeler
MV - Motor Vehicles - > RF - Refinance
Shares and SS - Shares and Securities
Securities
Fixed Deposit FD - Fixed Deposit
Insurance IN - Insurance
Book Debts BD - Book Debts
Others OT - Other - > CE - Computer Equipment
OT - Other - > OE - Office Equipment
OT - Other - > FF - Furniture & Fixtures
OT - Other - > MS - Miscellaneous
Gold Ornaments
Gold Coins

5.2.4 Loan Account Creation in LMS

1. System should have separate menu option for loan creation.

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2. System should have an option to capture below loan details of the applicant
and create Loan Account Number.
o Product Details- Details like Product and Scheme details, Product
parameters.
o Loan Details- Details like Sanctioned Loan Amount, Tenure (in Months) ROI,
EMI, Purpose of Loan etc
o Limit Details – Loan Account and Customer limit.
o Disbursement Details- Disbursal Details like No. Of Disbursals, Disbursal
Amount, Date of Disbursals, Mode of Disbursement, Beneficiary Bank
Details, single or multiple disbursement details etc.
o Collateral Details- Details like Collateral Type, Subtype, Collateral Details,
Collateral Value, LTV, Owner Name etc.
o Repayment Details- Details like EMI Start Date, EMI End date, Repayment
Schedule, Repayment Frequency, Repayment Mode, Moratorium details etc.
o Instalment Repayment Types for Term Loan are:
1. Equated
2. Non-Equated
3. Graded
4. Bullet
5. Balloon
6. Structured
o The Graded Payments are restricted to one Tranche Disbursement.
o System should have facility to process the loan with Equated Instalment
with Weekly / Fortnightly / Monthly/Quarterly/Half Yearly/Yearly
Frequency.
o System should have facility to process the loan with Non- Equated
Instalment with Monthly/Quarterly/Half Yearly/Yearly Frequency.
o System should have facility to process the loan with Graded (Step up / Step
Down) Instalment with frequency as monthly.
o System should have facility to process the loan with Bullet Instalment.
o System should have facility to process the loan with Balloon Instalment with
Monthly Frequency.
o System should have facility to process the loan with Structured Instalment.

o Charges - Initial Money Deposit details, Processing fees, Cersai charges,

Loan cancelation charges, pre-payment and foreclosure charges, penal
charges etc.
o MIS Details- Details like Sector, Sub Sector, Industry, Sub Industry, Purpose
of Loan.
o Documents – All Documents collected to be uploaded.
3. In Masters, user should be able to configure different interest method like Fixed
and Floating.
4. System should have an option for Checker Operation User to verify details of
the Loan Account Number created.
5. System should have an option for checker user to reject the Loan Account
Number created in system.

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6. System should have an option for maker user to modify the rejected Loan
Account Number details.
7. System should have an option for Maker Operation User to modify ROI,
Repayment Mode, Mode of Disbursement, Related Party Details (Co-
Borrower/Guarantor), MIS Details in Account Modify Function Screen.
8. System should have an option for Checker Operation User to verify the modified
Loan Account Details
9. System should have an option for Checker Operation User to reject the
modified Loan Account Details
10. System should have an option for Maker Operation User to recheck the rejected
details and update the necessary changes to resubmit for verification. System
should have an option for Checker Operation User to reverify the Updated
details.
11. System should have an option to capture insurance details of the customer
(General & Life).
12. System should have the option to capture the availability end date to be
modified before or on the date of disbursement. Availability end date is the
end date for any disbursement in the account. It will also be used for
calculating commitment fee.
Example: If availability end date is 3 months then from the sanction date to
next three-month customer can take the disbursement at any point of time. But
after the availability end date commitment fee will be applicable.
13. System should allow to open account with Back dated with exception approval.
14. System should have upload option to create Loan Account Numbers in bulk.
● System should allow to capture moratorium details with below options:
● Moratorium period in months
● Moratorium Type-
● Capitalize Interest (Simple Interest, Cumulative Interest)
● Charge No Interest.
● Moratorium on Principal and Interest
● Moratorium on Principal
15. System should provide an option to capture loan review date for each loan
account. This will be updated by the user for the next review date after the
loan account is opened. (for CC/OD product)
16. Multiple Loans under same Customer is possible and the interest rate will / may
vary from loan to loan or it may be same.

5.3 Disbursement
1. System should have provision to create disbursement schedule for single /
multi tranche disbursal.
2. System should display single or multiple disbursement details along with No.
of Disbursals, Disbursal Amount, Date of Disbursals, Mode of Disbursement,
Beneficiary Bank Details.
3. System should have provision to view all charges during disbursement.
4. System should have an option to waive charges partially / fully.
5. System should have an option to collect the GST on the charges.
6. System should have an option to adjust IMD amount towards processing fee.

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 7. System should have an option to deduct the Pre-EMI charges upfront from
the disbursement for unsecured loans (this should be configurable).
8. System should have provision to deduct the advance instalment upfront
from the disbursement.
9. System should have provision for different modes of disbursement like
NEFT, RTGS, IMPS, UPI, DD/Pay order.
10. System should have a provision for split disbursement as per sanction letter.

5.4 LMS to Bank Integration for actual Disbursement

1. System should have banks API integration for disbursement settlement
2. API to display the status of disbursal/settlement amount to customer.
Status: Rejected/Success/in process
3. All rejected status – System should have an option to do manual disbursement
for rejected cases with appropriate approval.
4. System should also have an option to make payment thru NEFT/RTGS and IMPS
basis the amount.
5. System should trigger E-mail / SMS to customer and Relationship Manager for
disbursement.
6. System should have a functionality of reversal of scheduled or Disbursement
and unscheduled payment to be available to a specific user group.
7. Disbursement advice needs to be given. This is a batch report to be generated
and placed in a predefined folder in the NBFC server for printing and mailing.
8. Daily disbursement report. This is a batch /online report to be generated In
batch the report to be placed in a predefined folder in the NBFC server.
(Report).
9. Bank requires a cover letter to be generated while disbursing the loan by
issuing demand draft. (Report).
10. System should have a validation of the limit node linked to the account at the
disbursement. If there is no sufficient limit available for the disbursement error
to be thrown for the user.
11. System should have an option for loan repayment schedule to be generated
after last disbursement and sent to customer as per the dispatch mode stated
in the account.
12. System should trigger an auto alert to be sent to RO/RM for all the pending post
disbursement document. The alert to be sent 15 days prior to due date and 15 /
30 days after its due.
13. NBFC requires report to be generated by system on monthly basis of pending
post disbursement documents as on date of report. also requires report on the
post disbursement items which are due in next three months (Report).
14. System should have a blacklist validation (Internal) at the time of each
disbursement. Exception should be triggered for referral approval.
15. Final repayment Schedule (Repayment Schedule After Disbursement Transaction
done and UTR is generated) In case of partial disbursal:
● The final Repayment Schedule will be drawn for the disbursed amount
only for which UTR has been received.

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 ● In case two/Multiple disbursement bank Accounts and amount has been
disbursed on same date, system will keep sending updated final
repayment schedules on intervals of UTR Receipts.
● In case two/Multiple disbursement bank Accounts and amount has been
disbursed on different dates, system will keep sending updated final
repayment schedules on intervals of UTR Receipts.
For e.g., 1 Cr Disbursement, 60 Lacs from Bank1 and another 40 Lacs
from Bank2 Suppose UTR from Bank 1 received at 11 AM, then Final
Repayment Schedule of 60 Lacs are generated Similarly, when UTR
from Bank 2 Received for 40 Lacs at 4:00 PM then, Final Repayment
Schedule again generated for the same account,
Here, with same Disbursement date, Disbursed amount will show as 1
Cr, and the schedule will be generated for 1 Cr.
● There is Expected Repayment Schedule developed as a Calculator to
check various conditions before arriving at the final parameters for Loan
Repayments with the same Logic and Template Structures.
16. System should validate below rules before generation of Repayment
Schedule.
● Total of Disbursements should not be greater than Sanctioned Amount.
● The Tranche Disbursement Dates should not be greater than or equal to
Drawdown date.
● The Instalment Frequency should be as per the Repayment Type.
● Interest Rate > 0 for generating Repayment Schedule.

5.5 Bank Mandate Integration with LOS

1. System should have an option to flow mandate data from LOS to LMS and
automatically create the mandate registration ID in LMS.
2. System should have an option to search the Bank mandates by Application
ID/ Cust ID/ Loan Account Number/PAN No.
● Mandate ID
● Loan Account Number
● Customer Name
● Instalment Start Date
● Instalment End Date
● Instalment Amount
● Loan Amount
● Repayment from A/C – Borrower/Coborrower/Guarantor
● Repayment Mode – ACH/PDC
● Name as in Bank Account
● A/C Type
● Account No.
● IFSC Code
● Bank Name
● Branch

3. System should have an option for Maker Operation User to modify Mandate
details in Mandate registration Screen.

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 4. System should have an option for Checker Operation User to verify the
modified Bank Mandate details
5. System should have an option for Checker Operation User to reject the
modified Bank Mandate details.
6. System should have an option for Maker Operation User to recheck the
rejected details and update the necessary changes to resubmit for
verification. System should have an option for Checker Operation User to
reverify the Updated Bank Mandate details.

5.6 Welcome Kit

1. System should trigger e-mail with welcome kit to customer once loan is
disbursed into the system.
2. For multiple disbursement welcome kit will be issued at the first disbursement.
3. Welcome kit contains:
● Letter welcoming customer with details of disbursement like Customer
details, Address, Loan Amount, Rate of Interest, Disbursement Date,
Tenure, Charges, Type of interest, Instalment amount.
● Loan Repayment schedule for full tenure.
● Terms and conditions.
4. As per the process welcome kit should be physically mailed to customer
communication address (offline).
5. System should also trigger SMS / WhatsApp notification to customer.

5.7 Mandate

5.7.1 Mandate Registration

1. System should have an option to add a mandate for ECS/NACH for

single/multiple loans of the same customer.
2. System should have a provision to capture Loan Account Number, Repayment
from Account (Borrower/Coborrower/Guarantor), Loan Amount, IFSC Code,
Start Date, End date, EMI Due amount, Account number of the Bank, Name of
the account Holder.
3. System should have the option to integrate e-mandate through API (Digio).
4. System should have a provision to link different loan account numbers of the
same customer with any existing active open mandate.
5. System should have an option to delink and link a loan account which is already
linked with an open mandate.
6. System should have a validation process thru API which bank details will be
verified.
7. System should have an option to block, unblock and close the open mandates.
8. Post validating the details, system will save Bank details for Mandate processing
9. System should generate UMRN – Unique Mandate registration number and
Mandate ID.
10. System should have an option for Maker Operation User to modify Mandate
details in Mandate registration Screen.

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11. System should have an option for Checker Operation User to verify the modified
Bank Mandate details
12. System should have an option for Checker Operation User to reject the
modified Bank Mandate details.
13. System should have an option for Maker Operation User to recheck the rejected
details and update the necessary changes to resubmit for verification.
14. System should have an option for Checker Operation User to reverify the
Updated Bank Mandate details.

5.7.2 Post Dated Cheque Maintenance

1. System should have a provision to capture the security cheques. In the event of
default, system should have a provision to trigger the security cheques to send
for clearing.
2. For the applicable due date, system should be able to trigger the processing
officer to send the required cheque for clearing.
3. System should also have a provision to maintain the schedule for list of cheques
available for repayment of particular loan. For example – If customer does not
wish to register for any mandate.

5.8 Interest Accrual

1. System should calculate accrual interest on principal outstanding balance daily
basis as part of EOD batch job.
2. System should generate the accrual interest voucher entries on end of month
(EOM) and reverse on 1st working day of next month.

Sample Voucher Entries

Voucher Entries
Interest Accrual
Account Name Dr/Cr Amount
Interest Earned but not Due Dr 5,000.00
Interest Income on Secured Loan Cr 5,000.00

Interest Earned but not Due Cr 5,000.00

Interest Income on Secured Loan Dr 5,000.00

3. System should have interest calculation option of actual days/365 or 30/360.On

a Leap Year 366 days of a year to be taken into calculation.
While doing Interest Calculation, the first day is Inclusive for calculating number
of days for interest application.
e.g., Disb Date = 15-01-2021
15-01-2021 to 15-02-2021 will have No. of Days = (17+15) = 32
16-02-2021 to 15-03-2021 will have No. of Days = (14+15) = 29
16-03-2021 to 15-04-2021 will have No. of Days = (16+15) = 31

4. System should have interest calculation configurable option.

5. System should have provision to configure Pre-emi interest.

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 Sample Voucher Entries
Voucher Entries
Interest Accrual for Pre-EMI
Account Name Dr/Cr Amount
20,833.3
Interest Earned but not Due Dr
3
20,833.3
Pre EMI-Interest Income on Secured Loan Cr
3

Being reversal of interest accrued at the

month end
20,833.3
Pre EMI-Interest Income on Secured Loan Cr
3
20,833.3
Interest Earned but not Due Dr
3

5.9 Billing and Repayment

1. System should provide an option to generate and download billing files for all
loans instalment due for scheduled repayment.
2. System should have an option to generate banking file for all the loans
instalment due for scheduled repayment.
3. System should have a provision to send the banking file to registered bank using
API (H2H integration) for the instalment dues collection.
4. System should have an option for capturing the reverse banking file along with
transaction status for settlement of loan instalment repayments through API
(H2H integration).
5. System should have a provision to send the banking file to registered bank using
API (H2H integration) for the instalment dues collection.
6. System should have an option for capturing the reverse banking file along with
transaction status for settlement of loan instalment repayments through API
(H2H integration).
7. System should have an option to send the banking file to registered bank in
excel format.
8. System should have an option to upload the reverse file along with transaction
status for settlement of loan instalment repayments.
9. System should calculate pre-emi interest for broken from disbursal date till first
instalment due date.

Sample Voucher Entries

Voucher Entries
On Pre EMI-Interest Billing Date
Account Name Dr/Cr Amount
20,833.3
Pre EMI-Debtors Dr
3
20,833.3
Pre EMI-Interest Income on Secured Loan Cr
3

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 On Receipts of Pre-EMI interest
20,833.3
Collection Bank Account Cr
3
20,833.3
Pre EMI-Debtors Dr
3

10. System should post the below voucher entries for the passed transactions.

Sample Voucher Entries

Voucher Entries
Billing Date
Dr/C
Account Name Amount
r
EMI Debtors Dr 25,000.00
TDS Receivable Dr 2,500.00
Secured Loan Principal (Control a/c) Cr 17,500.00
Interest Income on Secured Loan Cr 10,000.00

On Receipt of EMI
Collection Banks accounts Dr 27,500.00
EMI Debtors Cr 27,500.00

Secured Loan Principal (Control a/c) Dr 17,500.00

Secured loans Given Cr 17,500.00

11. For all the failed transactions, system should have a provision to generate a
report.

Sample Voucher Entries

Voucher Entries
In case of bounce On Receipts of 2nd Emi get bounced
Dr/C
Account Name Amount
r
EMI Debtors Dr 25,000.00
TDS Receivable Dr 2,500.00
Secured Loan Principal (Control a/c) Cr 17,500.00
Interest Income on Secured Loan Cr 10,000.00

On Receipt of EMI-Bounce
Collection Banks accounts Dr 27,500.00
EMI Debtors Cr 27,500.00

EMI Debtors Dr 27,500.00

Collection Banks accounts Cr 27,500.00

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12. For all the part payments of Instalment amount, System should have a provison
to do appropriation as per IPC business logic. System should first adjust
instalment amount towards interest and remaining amount to be adjusted to
principal System.

5.10 Penal Interest

1. System should have an option to configure penal interest at product level.
2. System should have penal interest rate configuration setup with per month or
per annum rate with radio button option.
3. System should display penal interest % while creation of loan.
4. System should auto-calculate penal interest amount on overdue instalment
amount and not on loan outstanding balance.
5. Penal interest is charged on the overdue Loan amount. Penal is applicable for
both principal and interest overdue amounts if applicable.
6. System should calculate if any statutory charges amount along with penal
interest amount.
7. Recovered penal interest amount should be credited to separate GL.
8. System should have a provision to configure penal interest collection
appropriation logic.
9. System should automatically display outstanding penal interest on collection
screen.

Sample Calculation Sheet

Loan Amount 10,00,000.00
Interest Rate 10%
Loan Tenure (yrs) 3
Loan EMI 32267
Penal Interest Rate (per month) 2%
EMI Bounce Date 5th Dec,2021
Penal Interest Amount to be Recovered on 31st Dec,2021 538

5.11 Interest Waiver

1. System should have a provision to waive off in full or partial interest as per
approval matrix
2. System should have option to define waiver interest calculation method with %
basis or flat amount.
3. Maker and checker option should be available for interest waiver validation.
4. System should have an option for Checker Operation User to reject the interest
waiver transaction.
5. System should have an option for Maker Operation User to recheck the rejected
details and update the necessary changes to resubmit for verification.
6. System should have an option for Checker Operation User to reverify the
updated interest waiver transaction details.

27
7. Post approval system should reflect new due amount post deduction of waiver.

6. Charges
1. System should have option for configuration of charges.
2. System should have option to define charges Calculation method % base or flat
amount.
3. System should have an option to configure GL against each charge.
4. System should have an option define charges minimum amount and maximum
amount.
5. System should have an option to define charges currency.
6. System should have an option to define charges description with remarks.
7. System should have provision of rounding off option to nearest decimal values.
8. System should have provision to define Amount Based Charges.
9. System should have provision to define Transaction Based Charges.
10. System should have provision to define Period Based Charges.
11. System should have a provision to include all statutory charges along with
charges amount. Statutory charges like GST (CGST (9%) and SCGST (9%) or IGST
(18%) would be calculated on the charges amount.
12. System should have provision to configure product level charges and adhoc
general charges.
13. Below is the sample list of charges which can be configurable in the charge
master.

Charges.xlsx

Charge Description
Processing fee
Cersai Charges
Document charges
Amortization Schedule
SOA Charges
Bank Mandate change/ swap charges
Cancellation Charges
Charges for Copy of Property Documents
Charges for List of Documents
Charges for NOC/ Duplicate NOC
Closure Statement Charges
Collection and Legal Fees
Disbursement Cheque Cancellation & re-issuance
Document retrieval
Duplicate No Dues Certificate
Early Closure Penalty

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 EMI repayment cycle date change (In addition to these, Gap interest will
also apply)
Foreclosure Charges
Insurance Premium(P)
Issuance of duplicate income tax certificate
Issuance of No objection certificate (NOC)
Late Payment Fee
Legal Charges
Modification of loan terms after first disbursement including but not
limited to re - scheduling of loan repayment term, addition/ deletion of
coborrowers etc
Non-utilisation of O/d charges
Prepayment
Renewal Charges
Reschedule Charges
Restructuring Charges
RTO transfer charges
Stamp Duty
Subvention
Tranche release charges
Valuation Charges
AMC Charges

6.1 Charges Waiver

1. System should have a provision to waive off in full or partial charges as per
approval matrix
2. System should have option to define waiver charges Calculation method
with % basis or flat amount.
3. Maker and checker option should be available for charges waiver validation.
4. System should have an option for Checker Operation User to reject the
charges waiver transaction
5. System should have an option for Maker Operation User to recheck the
rejected details and update the necessary changes to resubmit for
verification.
6. System should have an option for Checker Operation User to reverify the
updated charges waiver transaction details.

7. Loan Cancellation
1. System should have menu option for loan cancellation.
2. System should allow to cancel the loan before first demand generation.
3. System should not allow the loan cancellation post demand generation.
4. Maker and checker option should be available for loan cancellation.

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5. Once checker approves loan cancellation transaction, system should post the
reverse voucher entries along with loan cancellation charges.
6. Voucher entries to be added.

8. Repayment Schedules
1. System should have below Repayment schedule options to be configured for the
products:
1. Equated Repayment Schedule
2. Non-Equated Repayment Schedule
3. Bullet Repayment Schedule
4. Balloon Method
5. Step-up/ Step Down-Graded
6. Structured Repayment Schedule
2. System should have below options to draw the repayment schedule:
1. Instalment Plan- Equated, Non-Equated, Bullet, Balloon, Graded,
Structured.
2. Frequency of Repayment: Daily, Weekly, Bi-Weekly, Monthly,
Quarterly, Half-yearly and Annual.
3. Days Method: System should have configurable option for interest
calculation based on (30/360, Actual/Actual).
4. System should calculate 1 day extra for leap year in-case of actual by
actual.
5. Instalment Mode: Advance and Arrears
6. System should have an option to round off the Instalment and interest
amounts.
7. System should have option to net-off the TDS amount in repayment
schedule.
8. System should have a configurable option to calculate broken period
interest/ Pre-EMI separately and along with first instalment.
9. System should calculate principal instalment across the loan period
equal to sanction loan only.
10. System should calculate the loan outstanding balance in repayment
schedule as per defined schedule.
11. System should calculate instalment amount with combination of
principal plus Interest. In-case of TDS net-off, calculated TDS amount
should be excluded in instalment amount.
12. System should display grand total of principal, interest, TDS and
instalment amount.
13. System should display equally divided principal amounts in repayment
schedule for instalment type Non-equated as per frequency selected
monthly / quarterly / half yearly /yearly and interest should be
calculated monthly for all frequencies.
14. System should have a provision of graded instalment facility like step-
up and step-down.
a. For Step-up-System should have a provision to increase the
instalment amount basis the percentage/amount. Excess

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 Increased instalment amount should be adjusted to the principal
outstanding amount.
b. For Step-Down- System should have a provision to decrease the
instalment amount basis the percentage/amount. for all
scenarios system should not have an impact on the interest
amount recovery in repayment schedule.
15. System should have a provision to calculate bullet instalment for the
frequency chosen.
a. System should calculate interest amount for the tenure and
principal to be recovered at the end of the term/closure of the
loan.
b. System should have provision to recover both interest and
principal at the end of the term/closure of the loan.

16. System should have a provision to calculate balloon instalment for the
frequency chosen. A balloon payment is a lump sum owed to the lender
at the end of a loan term after all regular monthly repayments have
been made
a. System should calculate balloon repayment schedule based on
the customer requested instalment amount and remaining
outstanding balance amount to be collected at the last
instalment.
b. System should have a provision to increase the instalment
amount basis the percentage/amount. Excess Increased
instalment amount should be adjusted to the principal
outstanding amount.
c. System should have a provision to refinance, incase customer is
not able to make the balloon payment.

17. System should have a provision to calculate the structure repayment

schedule.

a. System should have a provision to increase/decrease the

instalments amount for the tenure of the loan.
b. Basis the above instalment calculation, system should
automatically increase/decrease the tenure of the loan.
c. System should also have a provision to change the rate of
Interest and repayment frequency.
d. Restructuring of loans (Increase of tenure of the loan) leads to
down-grading the asset classification from the existing
classification bucket.

8.1 Lock-in period

1. System should have a provision to setup the lock in period for prepayment
and foreclosure
2. System should not allow to create pre-payment transaction before the lock
in period of the loan tenure.

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 3. System should not allow to create foreclosure transaction before the lock in
period of the loan tenure.
4. System should allow to create pre-payment transaction post the lock in period
of the loan tenure.
5. System should allow to create foreclosure transaction post the lock in period
of the loan tenure.

8.2 Pre-Payments / Foreclosure

1. System should have a provision to setup the lock-in-period for prepayment
and foreclosure
2. System should not allow to create pre-payment transaction before the lock
in period of the loan tenure.
3. System should not allow to create foreclosure transaction before the lock in
period of the loan tenure.
4. System should allow to create pre-payment transaction post the lock in period
of the loan tenure.
5. System should allow to create foreclosure transaction post the lock in period
of the loan tenure.
6. System should have a provision to configure tenure-based prepayment and
foreclosure charges.
7. For all auto cases,
Example:

Sample list for Prepayment / Foreclosure Charges

6% of Principal outstanding for loan foreclosed within 12 months of loan
Part
sanction
Payment
5% of Principal outstanding for loan foreclosed after 12 months of loan
Charges
sanction
6% of Principal outstanding for loan foreclosed within 12 months of loan
Foreclosure sanction
Charges 5% of Principal outstanding for loan foreclosed after 12 months of loan
sanction
There are no charges on foreclosure or pre-payment on floating rate term loans
sanctioned to individual borrowers. The above part prepayment and foreclosure charges
are subject to the regulatory requirements and directions prescribed by Reserve Bank of
India from Time to time

Part Prepayment / Foreclosure Charges - Amount

Based
Part
Payment 4% charges on Loan Principle Outstanding
Charges
Foreclosure 6% of Principal outstanding for loan
Charges foreclosed

8. System should have a provision to configure tenure-based prepayment and

foreclosure charges.

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