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Amortization of Unutilized Loan in 55A Interest Rate Instrument

Dear Expert,

We are implementing Interest Rate Instrument 55A for Loan Borrowing (200) process.

There is a charge of 0.65% on the unutilized Loan amount charged Semi-annually from the actual Loan amount. The same has to be Amortized with Internal Rate of Return (IRR) over the period of Loan.

We can book the expenses as flow but how can we amortized this. Kindly advice.

Regards,

Sarfaraz

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5 Answers

  • Mar 06 at 01:15 PM

    Dear Experts,

    Please assist me to achieve this.

    Regards,

    Sarfaraz

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  • Apr 02 at 07:55 AM

    It is better to use 56A product type with 55A. There is a condtion to charge what you want in 56A product type linked with 55A. Take a lootk at "Charges" tab. What you need is 1204 condition - charges for unutilized amount.

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  • Apr 02 at 09:38 AM

    As to amortization, this note 939634 says you have to put check mark your flow as Position relevant.

    The rest is to customize amortization.

    some comments from FM TPM_TRL_AMORTIZE:

    * In case of interest(bustranscat 1011), payment(2015),
    * fee/tax (2020), and execution(4004) amortize only
    * if the business transaction is position relevant.
    * Position relevant flow(activated fee/tax)
    * can be added to interest or payment in FWZE as well.

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  • Mar 30 at 08:14 PM

    Dear Sarfaraz,

    Could you please provide some screenshots of this charge in your contract?

    Many thanks in advance.

    Best Regards,

    Nyckolas

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    Former Member
    Apr 13 at 06:59 PM

    Hi Sarfaraz,

    this is Possible in standard. For the product type 55A, in transaction type settings, you can activate the check box Permit Premium / Discount.

    Add a SEC gross amortization step in the PMP and in your contract a new field will be activated where you can give the % charge. This will then be amortized on the unutilized balance of the loan.

    Regards,

    Nikhil

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