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From "Adi Raju" <adi.r...@confluxtechnologies.com>
Subject RE: Issues in interest recalculation
Date Thu, 08 Dec 2016 05:23:37 GMT
Hi Sander 

PSB

Regards,
Adi Raju

Principal Architect, Conflux Technologies Pvt Ltd
Address: #304, 2nd Floor, 7th Main Road, HRBR Layout 1st Block, Bengaluru, Karnataka, 560043
INDIA


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-----Original Message-----
From: Sander van der Heyden [mailto:sandervanderheyden@musonisystem.com] 
Sent: 07 December 2016 22:24
To: dev@fineract.incubator.apache.org
Cc: A good place to start for users or folks new to Mifos.
Subject: Re: Issues in interest recalculation

Hi Adi,

Thanks for your feedback. I already left some test cases on the demo (but have updated the
same product in between so you'll need to check the derived data for these). I'll work on
some more cases that we've seen locally tomorrow, but these are the ones that were already
there.


*Incorrect interest in Loan Schedule for first instalment when making an early payment* See
https://demo.openmf.org/#/viewloanaccount/302, where you see 3.85 of interest paid on the
summary and loan transactions, yet the 3.85 is still due on the instalment and if you look
at the schedule via the API is reported as outstanding interest (which the transaction has
already paid).

[Adi] In case of interest recalculation enabled loans, there is no way to realise a complete
EMI components whose due date is in the future. Any early payments gets adjusted to the principal,
and hence there will be some interest component which will remain due as of the future due
date. From calculations or schedule point of view the early paid amount is completely getting
adjusted to Principal and interest is pending. 
Repayment strategy decides the splitting of components in a transaction. Looks like the repayment
strategy needs a correction not to consider the interest component in case of early payment.

*Interest recalculation causes incorrect schedule with duplicate instalments* For the daily
loans with duplicate instalments see:
https://demo.openmf.org/#/viewloanaccount/304, where you can see that 2 payments fall due
on the same day. If you undo disburse the loan and preview the schedule before disbursement
you'll not see duplicate payments on the same day.
[Adi] As I see original schedule is fine, but during repayments some duplicates are seen.
This is definitely a bug.

Thanks,
Sander




Sander van der Heyden

CTO Musoni Services




Mobile (NL): +31 (0)6 14239505
Skype: s.vdheyden
Website: musonisystem.com
Follow us on Twitter!  <https://twitter.com/musonimfi> Postal address: Hillegomstraat
12-14, office 0.09, 1058 LS, Amsterdam, The Netherlands

On 7 December 2016 at 11:20, Adi Raju <adi.raju@confluxtechnologies.com>
wrote:

> Hi Sander,
>
> Interest recalculation is allowed only when "Calculate interest for 
> exact days in partial period" is enabled in product definition.
> Consider the scenario: holidays calendar is empty, all days are 
> considered working days and payments are always on time, you will see 
> the interest applied equally with interest rate 1% considering 12%pa 
> interest with monthly payment period.
>
> In case there is any date difference due to holidays/working days 
> consideration or early payments etc, the calculation happens as follows:
> Assume installment is falling on 1st Feb, but due to holiday the 
> installment is postponed to 2nd Feb and consider 12%pa interest rate.
> Interest for the whole month of Jan is calculated at 1% and interest 
> for the 1 additional day in Feb is calculated as 1%*(1/28).
> For the installment on 1st Mar, interest is calculated as 1%*(27/28) 
> would be used.
> This is how the current interest recalculation happens to make sure 
> the interest is collected for each and every day.
> And partial interest for any day is calculated based on the number of 
> days in the loan installment period.
>
> I am unable to reproduce other issues that you have mentioned. Looks 
> like they are linked to some other factors as well. If you can 
> reproduce them on demo.openmf.org and provide with loan ids or 
> relevant details, we can get back with clarifications or verify if it is really a bug.
>
> Regards,
> Adi Raju
>
> Principal Architect, Conflux Technologies Pvt Ltd
> Address: #304, 2nd Floor, 7th Main Road, HRBR Layout 1st Block, 
> Bengaluru, Karnataka, 560043 INDIA
>
>
> Disclaimer: The information contained in this e-mail message and any 
> files/attachment transmitted with it is confidential and for the sole 
> use of the intended recipient(s) or entity identified. If you are not 
> the intended recipient, please email: support@confluxtechnologies.com 
> and destroy/delete all copies and attachment thereto along with the 
> original message. Any unauthorised review, use, disclosure, 
> dissemination, forwarding, printing or copying of this email or any 
> action taken in reliance on this e-mail is strictly prohibited and is 
> unlawful. The recipient acknowledges that Conflux Technologies Private 
> Limited or its subsidiaries and associated companies are unable to 
> exercise control or ensure or guarantee the integrity of/over the 
> contents of the information contained in e-mail transmissions. Before 
> opening any attachments, please check.
>
>
>
>
> -----Original Message-----
> From: Sander van der Heyden 
> [mailto:sandervanderheyden@musonisystem.com]
> Sent: 05 December 2016 17:06
> To: dev@fineract.incubator.apache.org; A good place to start for users 
> or folks new to Mifos.
> Subject: Issues in interest recalculation
>
> Hi All,
>
> We've been doing a relatively extensive round of testing on interest 
> recalculation loans and found the following issues (on demo.openmf.org).
> All of the cases below have:
> - Interest recalculation on
> - Interest calculation = same as repayment period
> - Amortization set to Equal instalments
> - Advance payments set to Reduce EMI Amount
> - No grace periods
> - No sliding interest rates, or multi-disbursements
> - No fixed EMI amounts
>
> I've not yet created JIRA items on it, because I was wondering whether 
> other people had seen these and there was a work-around by specifying 
> the right params? Also when trying to debug some of this I think the 
> calculations have now been made so incredibly complex that it is very 
> hard to fix some of these without creating other bugs in exchange.
>
> *Daily interest on Same as Repayment period* On monthly loans, even 
> though same as repayment period is selected, the interest calculation 
> seems to happen on a daily basis. We see jumps up and down in the 
> schedule, which should not happen especially before any payments are 
> made, as in that case the interest calculation should be identical for 
> each month (we are using same as repayment period) and therefore the 
> interest amount should always drop month over month, with principal going up.
>
> *Incorrect interest in Loan Schedule for first instalment when making 
> an early payment* When setting up any interest recalculation loan, and 
> making an early payment on the first instalment, this updates the 
> schedule with all of it going to principal, leaving the interest 
> outstanding. However the actual transaction does split part of it to 
> interest and so does the loan summary.
> In subsequent instalments this no longer happens.
>
> *Interest recalculation causes incorrect schedule with duplicate
> instalments*
> On a daily loan, when an installment was originally due on a weekend 
> day, it get's pushed forward, skipping that day correctly. However in 
> recalculation this is no longer happening therefore introducing 2 
> installments on the same date one with a 0 length. So what happens is 
> pre-correction you have an instalment on the 3rd of December, then one 
> on the 5th (skipping sunday). After the payment and recalculation it 
> has 2 instalments due on the 5th, one with 0 days and no interest.
>
> *Single instalment loans do not recalculate* When a loan with 1 
> instalment is created and the client prepays on that one instalment, 
> interest is not recalculated.
>
> *Early payment of all principal throws an EMI error* When repaying the 
> full principal due on the loan in an early instalment it throws an EMI 
> error, which should not happen, there is still a bit of interest to 
> pay, but no more principal. This means the schedule should just show 
> that interest remaining (or close the loan as there is no interest).
>
>
> Thanks,
> Sander
>
>


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