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TRM - Interest is not calculating on partial repayment amount

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507

Hi all

Scenario -

1) Loan is taken for 5,00,000 on Oct 14th, 2022 at 1% interest.

2) On Oct 31st, 2022, we made a partial payment of 2,50,000 and we would like to calculate interest only on 2,50,000 for the day from Oct 14th 2022 to Oct 31st 2022. But the system is calculating 5,00,000 not on payment amount of 2,50,000.

Any suggestion/recommendation is highly appreciated.

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Answers (1)

Answers (1)

rudolf_brysa
Associate
Associate
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Hi nag1234,

what you describe is accrued interest. The interest is has calculation basis of the nominal decrease and is due date is equal to the nominal decrease. The nominal decrease is also called early repayment in this scenario. This is setup in the Customizing in the definition of the flow type for the nominal decrease:

Financial Supply Chain Management

Treasury and Risk Management

Transaction Manager

Money Market

Transaction Management

Flow Types

Define Flow Types - MM Transactions

And inside the setting is in the frame "Other parameters". Depending on the customer release it is simply Checkbox "Accrued Int. Calc..." or a List box with the same name and Value "Accrued Interest Calculation".

Regards,

Rudolf