Credit Management
This page explains implementing the use case of credit management using a combination of Finscale micro-services.
Summary: Credit Management is the management of different loan lifecycle events from the point of Customer onboarding, approval of a loan application, disbursal and tracking the repayment behaviour until the closure of the stated loan. Different types of repayment scenarios such as Reschedule, refinance, preclosures, foreclosures, writeoff etc are also part of Credit Management. As Loan origination service is an independent service in Finscale, and with more and more advancements in borrower relationship management, all loan lifecycle events excluding the customer origination are consideredd for Credit Management Use case.
For Credit management use case, following explains the possible loan product criteria for the Credit Management Service:
Define Standard Loan Products library |
Ability to create, read, delete and update basic loan products library |
Based on amortization type, Range of Int, Principal, loan term & loan purpose, other custom factors |
Ability to create, read, delete and update Product Mix of loans and other type of financial products |
A. Base library of lending products, a mix of lending products, or a mix of other financial instruments.
Loan Product Standard Template contains the following minimum viable information:
Sno. | Description | Examples |
1 | Range of Principal | 10000-30000 $ |
2 | Type of Amortization - Equal amortization type containing: | Equal |
2.1 | Variable pay cycles type such as bi-monthly, monthly, weekly, bi-weekly, daily | Monthly |
2.2 | Repayment frequency guidelines for the stated pay cycle types | Monthly or daily or semimonthly |
3 | Range of Interest with Interest Type - Reducing balance rate or falt interest rate | 0-3 % per semi month |
4 | Range of the tenure of the Loan specified in Loan Term | 3-6 months |
Interest ranges have an explicit conversion formulation such that periodic interest rate, effective interest rate and annual nominal interest rate.
B. There are the following types of identifiable information contained in the loan product template which should remain unchanged across all loan offers translated from the template Loan Products:
Sno. | Description | Examples |
1 | Minimum days between disbursal and first repayment date | 15 days |
2 | Interest method - Declining Balance | Declining, flat etc |
3 | Calculation of Interest for exact days in a partial period | Yes or no |
4 | Repayment strategy | Penalties> Fees>Interest>Principal |
5 | Arrears tolerance | x days or x repayment periods |
6 | Fixing of the installment amount | Yes or No |
7 | Rounding principles followed | System-wide configuration |
8 | Fund Mapping criteria for loan products | For securitization process tagging |
C. The following types of attributes have a dynamic relationship with loan offers translated for each borrower in the Loan origination service.
Sno. | Description | Examples |
1 | Number of days a loan may be overdue before moving into arrears | X days or x repayment periods |
2 | Maximum number of days a loan may be overdue before becoming an NPA (non-performing asset) | X days or x repayment periods |
3 | Movement of loan account out of NPA only after all arrears have been cleared | Yes or No |
4 | Principal Threshold (%) for the Last Instalment | X % determined by Risk effect |
5 | Pre-closure interest calculation rule | Any Formulation |
6 | Advance payments adjustment type | Any Formulation |
7 | Interest recalculation compounding factors | Identification of these factors |
8 | The frequency for recalculating Outstanding Principal | Repayment Period based |
9 | Frequency Interval for recalculation | Repayment period based |
10 | Recognization of Arrears based on the original schedule | Yes or No |
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