THIS IS A TEST INSTANCE. ALL YOUR CHANGES WILL BE LOST!!!!
Goals
- Allow Fineract to support basic open-ended credit, i.e, a loan account on which borrows can make multiple withdrawals subject to the total balance being lesser than a predefined limit.
Background and strategic fit
Fineract 1.x has good support for term loans , i.e loans wherein a complete repayment schedule is generated at the time of approval/disbursal. However, it lacks support for revolving credit / line of credits / open ended loans like credit cards. Introducing the same in Fineract-CN would help differentiate it from Fineract 1.x and encourage users having these requirements to implement Fineract-CN
Assumptions
The specification isn't comprehensive and builds on top of functionality already present in Fineract 1.x / enterprise forks of Fineract 1.x which are a pre-requisite to support an LOC (Line of Credit) product in its entirety, which include
- All common loan product settings including fees, penalties, (indexed) interest rates, amortization, repayment strategies, multiple tranches, moratoriums, grace periods, arrears tolerance etc
- Integration with accounting
- Loan origination
- Loan servicing including delinquency and defaults management
- Collateral management
- Customer net overdraft facilities
- Customer exposure limits
The specification instead focuses on the additional features required in the loan module to support open-ended credit
Requirements
| # | Title | User Story | Importance | Notes |
|---|---|---|---|---|
| 1 | Set product credit limits | As an org user, I must be able to set the max credit limit for an open-ended LOC product | Must Have | |
| 2 | Set product repayment frequency and rules for payment amounts | As an org user, I must be able to set the permitted frequencies for the repayment on the LOC product along with the minimum payment amount defined as one of the following
| Must Have | |
| 3 | Associate LOC account to customer level overdraft facility | As a loan officer, I must be able to optionally associate a LOC account to an existing customer level overdraft facility. Once I have done the same, the credit limit of this account is determined by the limit associated with the overdraft facility and the balance of other accounts linked to this facility. | Nice to Have | Some institutions allow creating multiple customer level overdraft facilities. The customer can then have multiple accounts linked to each such facility. |
| 4 | Full flexibility to update interest rates on active loc accounts | As a loan officer, in addition to associate indexed interest rates to LOC accounts, I must be able to edit the applicable interest rate on an active LOC account. While doing so, I should not have any constraints other than
| Must Have | As open-ended accounts are long running, this is a common requirement. |
| 5 | System generates repayment schedule entry on payment due date | As a system user, I should be able to view details of the scheduled repayment on a LOC account on the repayment due date. This schedule entry should be created as a part of the daily system batch jobs which updates the payment amount based on the rules for payment associated with this account. | Must Have | A fixed grace period is then associated with this new generated repayment schedule entry giving the customer sufficient time to make a payment |
User interaction and design
Questions
Below is a list of questions to be addressed as a result of this requirements document:
| Question | Outcome |
|---|---|
| Do we need support for other common use cases like interest free periods after each tranche etc ? | Yes, for simplicity, all such use cases are kept out of scope for the most basic LOC product |