T24 -Loans &T24

Deposits
– LD MODULE
(Loans & Deposits)

Aarthi Rajesh Khanna

1
LD – Product Overview

What is Loan?

The act of giving money, property or other material goods to a another party in
exchange for future repayment of the principal amount along with interest or
other finance charges.

An arrangement in which a lender gives money or property to a borrower, and

the borrower agrees to return the property or repay the money, usually along
with interest, at some future point(s) in time.

What is Deposit?

A money deposit at a banking institution that cannot be withdrawn for a preset

fixed 'term' or period of time ; or can be withdrawn fully or partially before the
preset fixed term with advanced notice and/or by having a penalty assessed.

When the term is over it can be withdrawn or it can be rolled over for another
term.
LD – Product Overview

Interest
Call / Notice
Bearing Fixed
Automatic Bullet
Floating
Schedule Interest
Frequency Fixed
Bullet
For Interest
Principal Periodic
Commitment Loan
Discounted
Fixed Period
Stand-alone Interest
Commitment Bearing
Fixed
Automatic Manual
Schedule Schedule Floating
Commitment Bullet
Charges Bullet Interest Periodic
Principal Frequency
Repayment For Interest
LD – Product Overview

Loans and Deposits will comprise of following areas which we will

discuss in detail in the following slides.
– Loans and Deposits – Dependencies
– Parameter Tables
– Product Features
– Enquiries and Reports
– Accounting Entries
– System Maintained Tables
LD - Dependencies

FT.COMMISSION.TYPE
BASIC.RATE.TEXT
BASIC.INTEREST LMM.CHARGE.CONDITIONS
CUSTOMER
CATEGORY INTEREST.BASIS LMM.INSTALL.CONDS

ACCOUNT PERIODIC.INTEREST LD.TXN.CODES

CURRENCY
CUSTOMER.SSI LD
SEC.ACC.MASTER LD.TXN.TYPE.CONDITION
CUSTOMER.CCY.ACCT APPL.GEN.CONDITION
LMM.ACCOUNT.BALANCES
AGENCY LD.GROUP.CONDITION
LMM.SCHEDULE.DATES
NOSTRO.ACCOUNT
LMM.SCHEDULES
ACCOUNT.CLASS
LMM.ADVICES LMM.SCHEDULES.PAST
LIMIT
LMM.ACTIVITY LMM.ACTION.CODES
COLLATERAL
LMM.TEXT LMM.HISTORY.LIST
SETTLEMENT.RATES
LD - Dependencies (Product Related)
To start with LD contracts mainly it required category codes
Category Codes exclusively used by LD
21095 – 21099 Commitment for Loans
21101 – 21105 Liability Commitment (Bond Issuance)
Category Codes used with MM module.
21001 – 21029 Deposit
21030 – 21039 Taking
21040 – 21044 Fiduciary Deposit
21045 – 21046 Sundry Deposit
21050 – 21074 Loan
21075 – 21084 Placements
21085 – 21089 Fiduciary Placement
21090 – 21094 Account Receivable
LD Dependencies – Interest Related
Interest Rate comprises of Fixed, Base and Periodic.
Fixed Rate – The Interest Rate can be Fixed. Usually during the life of the
loan/deposit the rate remains the same but if based on the market
demands bank might have a flexible approach and allows to change the
rate.
Base Rate - Banks usually pay or charge interest at an agreed spread with the
base rate, so the contracts will have tied to the base rate via a key. In this
case when the base rate changes, the interest amount due are re-
calculated automatically.
Periodic Manual - The rate changes will be on predetermined dates and
become effective on the appropriate rollover date.
Periodic Automatic - The PERIODIC.INTEREST table can have rate changes
with the predetermined dates and become effective on the appropriate
revision date.
Periodic Straight – The user is given the flexibility to add a spread and to
change the rate when required manually.
LD Dependencies – Interest Related
The below referred interests said to be Floating Interest.
It is possible to set a negative Interest rate in BASIC.INTEREST through
NEG.INT.RATE field.
Also there can be a negative spread in LD record inputted (Which can lead to
effective rate to be negative).
LD Dependencies – Interest Related

The below referred PI table defines different rate types with period and rate
respectively.
Possible input of Bid Rate for Deposits and Offer Rate for Loans.
This PI record is generated on daily basis and if required for any changes
to any of the back dated record it can be made.
LD Dependencies – Charges and Commissions
While creating LD contract, the defined charges through
LMM.CHARGE.CONDITIONS can be attached to it. This is to indicate
whenever Bank wishes to receive / pay charges.
Either to do Accrual or Amortisation of charges by means of desired period
(Daily / Monthly) it can be achieved via ACCRUAL.FQU and
ACCRUE.AMORT fields.
LD Dependencies – Currency Related

BUSINESS.DAY.DEFINITION field to indicate Countries and Regions

during the input of a contract. These Countries and Regions checks
holiday table against any scheduled activity and if required overrides
generated.
All the transactions will have Interest Day Basis defaulted from
Currency table where changes takes place during contract level.

COUNTRY REGION

CURRENCY.PARAM HOLIDAY

CURRENCY CURRENCY.MARKET
LD Dependencies – Currency Related
Interest day basis table is where different keys is being defined for
calculation of interest. The method followed for calculating number
of days in an interest period and days in a year.
Key Days/Denominator
 A - 360 / 360 A 360/360
30 days in each month A1 360/360
360 days in an year A2 360/360
B 366/360
 A1 - 360 / 360 C 366/366
Additional interest of February D 360/366
calculated on last day E 366/365
F 360/365
 A2 - 360 / 360 H 30/356
Additional interest earned of February F1 360/365
calculated on penultimate day F2 360/365
S Special
W 252/252
W1 21/252
LD – Parameter Tables

– It involves following Parameter tables which is required and to be set up to

create LD records.

LMM.INSTALL.CONDS

LD.TXN.CODES

LMM.CHARGE.CONDITIONS

LD.TXN.TYPE.CONDITION

LD.GROUP.CONDITION

LMM.ADVICES

LMM.ACTIVITY

LMM.TEXT
LMM.INSTALL.CONDS
Here @ LMM.INSTALL.CONDS table will have details related to accrual dates /
cycles towards both LD & MM, where it has details about the P&L accounts
that will be used. To have separate accrual cycles for foreign and local
currencies, here it is defined.

The @ID of this table will be of company.

LMM.INSTALL.CONDS
LMM.INSTALL.CONDS
LMM.INSTALL.CONDS
LD.TXN.CODES
Open Deposit, Open Loan, Open Placement, Open Sundry, Open Commitment,
Principal Increase, Open Liability Commitment, Principal Repayment, Interest Pay,
Commission Pay, Reimbursement of Commission, Adjustment of Commission,
Interest Accrual, Commission Accrual, Principal Decrease etc are the events
which will happen during the life of a LD contract.

Accounting entries are duly passed affecting Customer account and P&L during
these events.

In LD.TXN.CODES, these each events will have transaction code defined. All
these transaction codes is from TRANSACTION table.
LD.TXN.CODES
LMM.CHARGE.CONDITIONS
CATEGORY.CODE: Defines the Profit and Loss Category or internal Accounts
where the charges are to be booked.

MTHLY.AMORTISATION: Specifies whether the fees or charges are to be

amortized.

CHARGE.CODE.KEY: ID of FT.COMMISSION.TYPE

PAY.RECEIVE: Specifies whether the Charge defined is to Paid by the bank

(PAY) or Received from the customer (RECEIVE).

TAX.RELIEF.FLAG: If set to 'Y' then the calculation of this fee would be as

follows, If the charge with SCHEDULE type 'I'(Interest ) then the tax relief fee
would be ((Interest Amount * Interest relief rate)) * ( Maximum Amt ) ( 100 )
(Outstanding Amt). If however the 'Outstanding Amt' was below the 'Maximum
Amt' then the tax relief would be (Interest Amount * Interest relief rate) 100.

USE.FT.TXN: If this flag is set to 'Y' then the TXN codes from the FT table of the
record in CHARGE.CODE.KEY will be used, instead of the default TXN codes.
LD.TXN.TYPE.CONDITION
Here in this table there can be rules to monitor specific category. There can be
minimum and maximum values for the term of the contract, the draw down
amount, the default interest rate (if required with spread), accrual rule,
commission, charges which can be set for each currency towards the product
category specified.

If required default start of day and maturity values may also be input.

Upon these values being defined here will get defaulted in to LD contract and
are changeable at the deal level.

The initial drawn down amount and term of the contract will be validated with
the TXN table, if exceeds there will be appropriate override generated.

Tolerances possible with Certificate of Deposits product, when the user inputs
the amount in to MAT.AMOUNT field and the system default AMOUNT based
on values of term and interest rate. There could be possible of errors due to
manual input, so to control the tolerances over the system calculated amount to
be in terms of absolute values or percentage. When the value input to
AMOUNT field exceeds the tolerances, an error message is displayed.
LD.TXN.TYPE.CONDITION
If the contract deal currency and the liquidation currency is different, the
default CONVERSION.TYPE and SETTLEMENT.MARKET possible in this
table.
LD.GROUP.CONDITION
This table record ID is of Contract Group from APPL.GEN.CONDITION record.
Here it is defined with Default spread for Loans / Deposits, spread applicable for
this group of customers, charge related details like type, ccy, percentage and flat
amount being defined here.
LMM.ADVICES
LD contracts against the categories will involve various transactions. Bank will
decide on the advices to be produced and the format using this table.
To generate advices, it has to be linked to activities in LD. Activities are defined on
to LMM.ACTIVITY application.
If required there can advised specialised to the desired LD category which can be
achieved through FORMAT.CATEGORY field. To these advices there should be
an confirmation through Delivery module which will make use of
DE.FORMAT.PRINT.
LMM.ADVICES
The outcome of LD contract will be accounting and delivery advices which require
action codes to be pre-supplied. LMM.ACTION.CODES will have the details of
action codes.

In LD module it requires to use suspense accounts for debits and credits which
are defined in ACCOUNT.CLASS. When advices are used and printed there can
texts whenever a suspense account is used. This arises mainly when settlement
instructions of counter party are not known, proceeds can be washed though
internal suspense accounts.
These texts are defined in LMM.TEXT which has got 9 debit and 9 credit, overall
of 18 texts.
Commitment
The Bank offers loan to its borrower and in return collects fee. Bank will
facilitate to move funds by means of Commitment.

Commitment can be revolving or non revolving.

Multiple loan drawings / different loan contracts can be linked to a single

commitment contract.
For further draw down, Commitment contract will be update with available
amount.

Revolving / Non Revolving commitments could be drawn in tranches.

This could be by means of cumulative or non cumulative.
Unutilized portion to be moved to next tranche or else will allow to lapse.

RE.CONSOL.SPEC.ENTRY will have update at the end of the day to have

track Commitment less any Drawings there from contingent.

Commitment fee could be charged on the full amount or on the unutilised

portion alone.
Commitment
A new Commitment record is input for a customer.
The calculation of fee will be based on the original or the unused amount
of the commitment amount.
The Commitment contract is mainly decided with values in to the fields
Commitment Type, Secured (Y/N), Liquidation Mode.
Commitment
The said Commitment transaction will also mainly look for Int, Schd and
Tranche Dets and Charge tab. These tab defined with Accrual Param and
Charge Code fields.
Drawing under a Commitment
In simple terms Loan can be drawdown against a Commitment.
LD module we can have option towards more complex stand-alone loans to
have payment schedules, rate change & interest settlement frequencies and
discounted product types.

Loan contracts always would be convenient to the users to make changes

very easily.
Change in Interest rate, maturity date can be done by breaking of contracts.
SCHEDULES
Commitment can be flagged as a non-drawable and this can be done through
the field COMMIT.DRAWING set to 'NO'. In this case it is possible to define a
series of 'P' schedule using LD.SCHEDULE.DEFINE to reduce the notional
principal amount and to repay capitalised interest.

If LD loan under revolving commitment contracts moved to PD with the amount

type 'PR', the commitment available amount is not increased.

The available commitment amount is increased only with the LD loan is paid or
the PD with 'PR' status is paid in the respective module.

During principal increase using PRIN.INCREASE field is done on LD loan

contract, seeing the account and up on available funds.

If during this course of PRIN.INCREASE there is no possibility of PD record

creation or updation is done.

If in case of principal decrease PD is not updated for the LD contract.

STMT.ENTRY is generated when there are funds in the liquidation account,
irrespective of liquidation mode. Else override message is generated.
SCHEDULES
Contracts will have schedule events occurring at maturity else request can be
made to have automatic schedule events.

When a contract requires to have schedules with multiple interest, principal, rate
change dates. This can be defined by the user in the define schedule screen.

To have this schedule screen, prior to that in a LD contract the said fields
AUTO.SCHEDS to be set 'NO' and DEFINE.SCHEDS to be set 'YES'.

The count of forward STMT.ENTRY to be generated and LMM.SCHEDULES

update, can be set either at LD input or using the default value set at field
FWD.PROJ in LMM.INSTALL.CONDS and accepts values in the range 1-99.

Defining Schedules:
The schedule screen has some header fields and in these fields user has to
specify the schedule information.
SCHEDULES

Input FORWARD.BACKWARD.KEY Purpose

1 FORWARD Go forward one or more days if non-
working date generated
2 BACKWARD Go backward one or more days if
non-working date generated.
3 FWD IN MONTH Go forward one or more days if non-
working date generated. But stay in
same month.
4 NOT AUTOMATIC User will set all dates manually.
5 CALENDAR Always use the date generated and
do not adjust it falls on a non-
working day.

Input BASE.DATE.KEY Purpose

1 BASE DATE Generate based on first date i.e. try to use anniversary
dates of starting date, i.e. the dates after a holiday
date will return to the same date as the base date.
2 PREVIOUS DATE Generate next date based on last date calculated i.e.
the dates used may creep forward in the month over
the contract life.
3 NOT AUTOMATIC User will set all dates manually.

Options for FORWARD.BACKWARD.KEY & BASE.DATE.KEY field.

SCHEDULES
Schedule transaction once authorised, schedules are created. If in case of any
amendments the existing schedule define screen is retrieved and amended.
When modified, the system will ensure with the current status of the contract that
the defined schedules are consistent.
If a schedule is defined to a contract it can be identified by value AMORT in the
field CONTRACT.TYPE and the value BULLET will remain of default schedules.
SCHEDULES
The schedule can be of ANNUITY, LINEAR and DISCOUNTED.
Further charges, commission can also be defined under respective
frequencies while defining manual schedules.
MAINTAIN LOANS – Amend / Reverse Loan
Loan can be amended or reversed.
It can be amended with Loan Amount, Maturity Date, Loan Product, Charges,
Commission etc.,
LD contract once amended it will have new repayment schedule generated.
MAINTAIN LOANS – Online Repayment/Partial Payment
On LD contracts possible to do online repayment, partial payment.
New repayment schedule will get generated based on the payment made.
MAINTAIN LOANS – Early Maturity of Loan
LD contract can be matured earlier with the option, Early Maturity.
The respective contract is selected through the enquiry.
ENQUIRIES
LD Loans – Product Wise:
List of Loans Product wise is listed and the required loan is selected from it.
ENQUIRIES
List of Loans under commitment:
This enquiry will list the loans under commitment.
The search can be of with the commitment number.
ENQUIRIES

LD Loans – Disbursed Today:

This enquiry will list the loans under commitment.
The search can be of with the commitment number.

Customer Provision Summary:

COB Reports
Imminent Maturities Report:

Maturing Events Report:

COB Reports
Contracts Accrual Report:

Rate Revision Report:

COB Reports
Contract Status Report:

PD Overdue Items (Agewise Analysis):

Accounting
LD contracts will result in accounting entries of Contingent and Non
Contingent.

STMT.ENTRY and CATEG.ENTRY passed for Debit / Credit to Accounts

and PL heads respectively.
Accounts represents customer and internal accounts.
PL heads include Interest, Charges and Commission.

Online entries, RE.CONSOL.SPEC.ENTRY passed in respect of Contracts.

For Commitment, passed during COB, for commitment amount, less any
loan under that, drawn during the day.

Asset types: FORWARDCR, FORWARDDB, LIVECMT, LIVECR, LIVEDB,

OVERDUEDB, NABCR, NABDB.

Trasanction codes through LD.TXN.CODES, LMM.INSTALL.CONDS and

FT.COMMISSION.TYPE used.

RE.TXN.CODE: CNW, FNW, ACC, MAT, CUS, APP etc

Accounting Entries

USD 1M Loan
Monthly Interest Accrual
Bullet Repayment of Principal and Interest

LD Contingent CUSTOMER A/C

1,000,000 1,000,000 1,000,000 1,000,000

Transaction Date Value Date 7,500
Maturity Value Date
Forward DB STMT.ENTRY
RE.CONSOL.SPEC.ENTRY
Interest Accrued
LD Asset Receivable Interest Income P&L

1,000,000 1,000,000 2,500 7,500 2,500

2,500 2,500
Maturity 2,500
2,500 Accrual
Value Date Maturity Accrual
PL Category 50XXX
Live DB LMM.INSTALL.CONDS LMM.INSTALL.CONDS
RE.CONSOL.SPEC.ENTRY RE.CONSOL.SPEC.ENTRY CATEG.ENTRY
System Maintained Tables

LMM.ACCOUNT.BALANCES
Contains information relating to principal movements, interest accruals, commission
accruals and funds paid / received in the contract.

LMM.SCHEDULES
Diary of future events for authorised contracts in LD and MM
Id is made up by contract number, event date (in Julian date format like 2001305
to indicate 305th day in the year 2001) and a suffix of 00

LMM.SCHEDULES.PAST
Events from LMM.SCHEDULES after the event date
Exception Sending Payment activity. If a Payment has to be sent two days prior
to value date of payment according to DAYS.DELIVERY Field in CURRENCY
table, then will remain in LMM.SCHEDULES file for two more working days
Updated in Close of business processing. Same Key as in LMM.SCHEDULES
System Maintained Tables

SETTLEMENT.RATES
Created when a contract has liquidation account currency different from deal
currency.
Used to store liquidation exchange rates for various event dates and currencies.
User may also input an exchange rate.

PROTECTION.CLAUSE Field.
If set to YES,  system derived exchange rate is compared with historic exchange
rates applied and the best exchange rate (whichever is more beneficial to the Bank)
considered for liquidation .
If set to NO, either the user input rate, and in its absence, system derived rate
would be used for liquidation.

EB.CONTRACT.BALANCES
Balance file containing details of consolidation key and Asset type wise balances.
Principal outstanding amounts in product files and any related amount fields such as
accrued interest, charges, commissions, etc.
Current and historical details are maintained.
Information held currency wise, Asset type wise and date wise balance as well as
consolidation key.
DEPOSITS
Deposits

Types of Deposits:

Interest bearing deposits: Carries various rate of Interest

Discounted(Zero Coupon) Deposits: A certificate of deposit (CD) that

is purchased at a largely discounted rate. It differs from a traditional
CD in that interest payments are not received yearly, but rather as a
lump sum at the date of maturity.
Deposit with Interest Bearing
Interest Bearing Deposit will have the below referred type contract to create.
Deposit with Interest Bearing
To define Account and Charge, it should be done through respective tabs.
Deposits - Balances
The details of Deposits after the input can be viewed through
LMM.ACCOUNT.BALANCES.
Deposits - Interest
The definition of Interest to the Deposit product is defined through
LD.TXN.TYPE.CONDITION table.
Maintenance of Deposits
The list of Deposit contracts is available from the enquiry to view, amend, partial
withdrawal, reverse and preclose.

We can now initiate for partial withdrawal with the selected Deposit.
Maintenance of Deposits
Partial withdrawal is initiated and record committed.
Deposits - Enquiry
List of Deposits Product wise:

Deposits Schedule (Summary):

THANK YOU