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From: "Adi Raju" <adi.raju@confluxtechnologies.com>
To: <dev@fineract.incubator.apache.org>
Cc: "'A good place to start for users or folks new to Mifos.'" <mifos-users@lists.sourceforge.net>
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Subject: RE: Issues in interest recalculation
Date: Mon, 26 Dec 2016 16:11:47 +0530
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archived-at: Mon, 26 Dec 2016 10:42:01 -0000

Hi Sander,

Regarding interest calculation in excel: I need all the loan product =
parameters to be able to derive the proper interest. Can you reproduce =
it on demo server and give me loan id?
Regarding loaned 333: Issue is self-explanatory, since no repayments =
transactions are there, the interest component is going beyond EMI. This =
is the behavior from the origin. I think we need to define the behavior =
for such instances, as we cannot have schedule with interest =
overshooting the EMI, and also this is a hindrance to back dated loan =
creation with interest recalculation.=20

Generally, interest calculations depend on the current day, daily/same =
as repayment interest calculation, compounding components, compounding =
day and REST. You might not be getting the exact amount, as you might be =
missing or overlooking on one of these parameters.

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: Friday, December 23, 2016 7:45 PM
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,

We are wondering whether you had a chance to look at the interest =
calculation excel? We are still unable to reconcile amounts for =
subsequent instalments.

In addition we've also started seeing more problems with loans that are =
prepaid significantly early on in the schedule, unfortunately I cannot =
test this on the demo as the ability to create new loans seems to be =
broken right now.

Thanks,
Sander van der Heyden


On 15 December 2016 at 11:16, Sander van der Heyden < =
sandervanderheyden@musonisystem.com> wrote:

> Hi Adi,
>
> Was wondering if you had seen my previous mail?
>
> In addition we've also got an issue when backdating the interest=20
> recalculation loans that have compounding on Interest enabled, and use =

> the "Same as repayment period" compounding type for interest and =
principal.
> This sample loan (https://demo.openmf.org/#/loanaccount/333/disburse)  =

> cannot be disbursed as a result of an EMI error:
> *error.msg.loanschedule.emi.amount.must.be.greter.than.interest*, when =

> you disburse with date of 1st of October.
>
> If you try to disburse as per 1st of November then it does work fine,=20
> which leads me to believe there is an issue in the error handling=20
> around compounding for backdated loans. As there are no params on a=20
> loan level, that we can adjust to not trigger interest recalculation=20
> when disbursing I'm not sure how to get around this one?
>
> 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 13 December 2016 at 08:52, Sander van der Heyden <=20
> sandervanderheyden@musonisystem.com> wrote:
>
>> Hi Adi,
>>
>> Thanks for your feedback, but not sure whether we can make this=20
>> calculation work, see attached excel using the same logic. It works=20
>> fine for working out instalment one, but does leave us with a 0.4=20
>> difference on the second instalment compared to today's schedule.=20
>> Could you let me know where we are going wrong, or whether this is =
actually a bug?
>>
>> Thanks,
>> Sander
>>
>>
>>
>> On 12 December 2016 at 06:20, Adi Raju=20
>> <adi.raju@confluxtechnologies.com>
>> wrote:
>>
>>> Interest calculation on future dates will be based on the assumption =

>>> that payment has been made up-to-date and assuming no arrears.
>>> Interest on the unpaid or compounded amount will be calculated and=20
>>> provided as part of schedule only till as of that day.
>>>
>>> So in the example,
>>> EMI is due on 1st  Dec and 2nd Jan. No repayment is made as of today =

>>> (12/12).
>>> So interest calculation will be as follows:
>>> Interest on compounded amount as of 1 Dec for 11 days (1st to 12th=20
>>> of
>>> dec)
>>> Plus
>>> Interest on amount as per original schedule for 21 days (13th dec to =

>>> 2nd of jan)
>>>
>>> As and when interest recalculation job runs every day, interest will =

>>> be revised to include calculations as of that day.
>>>
>>> Regards,
>>> Adi Raju
>>>
>>> Principal Architect, Conflux Technologies Pvt Ltd
>>> Address: #304, 2nd Floor, 7th Main Road, HRBR Layout 1st Block,=20
>>> 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=20
>>> sole use of the intended recipient(s) or entity identified. If you=20
>>> are not the intended recipient, please email:=20
>>> support@confluxtechnologies.com and destroy/delete all copies and=20
>>> attachment thereto along with the original message. Any unauthorised =

>>> review, use, disclosure, dissemination, forwarding, printing or=20
>>> copying of this email or any action taken in reliance on this e-mail =

>>> is strictly prohibited and is unlawful. The recipient acknowledges=20
>>> that Conflux Technologies Private Limited or its subsidiaries and=20
>>> associated companies are unable to exercise control or ensure or=20
>>> guarantee the integrity of/over the contents of the information=20
>>> contained in e-mail transmissions. Before opening any attachments, =
please check.
>>>
>>>
>>>
>>> -----Original Message-----
>>> From: Sander van der Heyden=20
>>> [mailto:sandervanderheyden@musonisystem.com]
>>> Sent: 09 December 2016 22:08
>>> 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, makes sense on the early payments and I=20
>>> agree the duplicate instalments is a bug. Looks like the=20
>>> holiday/workingdays config is ignored for that bit. However I think=20
>>> we'll indeed need to introduce this in the payment schedules as=20
>>> well. In addition I found another strange scenario which is:=20
>>> https://demo.openmf.org/#/view
>>> loanaccount/321
>>>
>>> Can you explain to me how the calculation for the interest for the=20
>>> 2nd instalment is made, so the first instalment which was due 8 days =

>>> ago is now overdue by 8 days and interest (should have) compounded=20
>>> as well. However I cannot work out the formula used to get to that=20
>>> amount of interest, when running the same example for a loan just 1=20
>>> day overdue, I was able to work out the amount, but only as long as=20
>>> I calculated 2 extra days. Is there any docs on this on the wiki (I =
could not spot them).
>>>
>>> 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=20
>>> Netherlands
>>>
>>> On 8 December 2016 at 06:23, Adi Raju=20
>>> <adi.raju@confluxtechnologies.com>
>>> wrote:
>>>
>>> > Hi Sander
>>> >
>>> > PSB
>>> >
>>> > Regards,
>>> > Adi Raju
>>> >
>>> > Principal Architect, Conflux Technologies Pvt Ltd
>>> > Address: #304, 2nd Floor, 7th Main Road, HRBR Layout 1st Block,=20
>>> > Bengaluru, Karnataka, 560043 INDIA
>>> >
>>> >
>>> > Disclaimer: The information contained in this e-mail message and=20
>>> > any files/attachment transmitted with it is confidential and for=20
>>> > the sole use of the intended recipient(s) or entity identified. If =

>>> > you are not the intended recipient, please email:=20
>>> > support@confluxtechnologies.com and destroy/delete all copies and=20
>>> > attachment thereto along with the original message. Any=20
>>> > unauthorised review, use, disclosure, dissemination, forwarding,=20
>>> > printing or copying of this email or any action taken in reliance=20
>>> > on this e-mail is strictly prohibited and is unlawful. The=20
>>> > recipient acknowledges that Conflux Technologies Private Limited=20
>>> > or its subsidiaries and associated companies are unable to=20
>>> > exercise control or ensure or guarantee the integrity of/over the=20
>>> > 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: 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=20
>>> > demo (but have updated the same product in between so you'll need=20
>>> > 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=20
>>> > making an early payment* See=20
>>> > https://demo.openmf.org/#/viewloanaccount/302,
>>> > where you see 3.85 of interest paid on the summary and loan=20
>>> > transactions, yet the
>>> > 3.85 is still due on the instalment and if you look at the=20
>>> > schedule via the API is reported as outstanding interest (which=20
>>> > 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=20
>>> > future due date. From calculations or schedule point of view the=20
>>> > early paid amount is completely getting adjusted to Principal and=20
>>> > interest is
>>> pending.
>>> > Repayment strategy decides the splitting of components in a
>>> transaction.
>>> > Looks like the repayment strategy needs a correction not to=20
>>> > 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=20
>>> > 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=20
>>> > duplicate payments on the same day.
>>> > [Adi] As I see original schedule is fine, but during repayments=20
>>> > 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=20
>>> > Netherlands
>>> >
>>> > On 7 December 2016 at 11:20, Adi Raju=20
>>> > <adi.raju@confluxtechnologies.com>
>>> > wrote:
>>> >
>>> > > Hi Sander,
>>> > >
>>> > > Interest recalculation is allowed only when "Calculate interest=20
>>> > > for exact days in partial period" is enabled in product =
definition.
>>> > > Consider the scenario: holidays calendar is empty, all days are=20
>>> > > considered working days and payments are always on time, you=20
>>> > > will see the interest applied equally with interest rate 1%=20
>>> > > considering 12%pa interest with monthly payment period.
>>> > >
>>> > > In case there is any date difference due to holidays/working=20
>>> > > days consideration or early payments etc, the calculation=20
>>> > > 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=20
>>> > > interest for the 1 additional day in Feb is calculated as =
1%*(1/28).
>>> > > For the installment on 1st Mar, interest is calculated as=20
>>> > > 1%*(27/28) would be used.
>>> > > This is how the current interest recalculation happens to make=20
>>> > > sure the interest is collected for each and every day.
>>> > > And partial interest for any day is calculated based on the=20
>>> > > number of days in the loan installment period.
>>> > >
>>> > > I am unable to reproduce other issues that you have mentioned.=20
>>> > > 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=20
>>> > > or relevant details, we can get back with clarifications or=20
>>> > > 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,=20
>>> > > 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.=20
>>> > > If you are not the intended recipient, please email:
>>> > > support@confluxtechnologies.com and destroy/delete all copies=20
>>> > > and attachment thereto along with the original message. Any=20
>>> > > unauthorised review, use, disclosure, dissemination, forwarding, =

>>> > > printing or copying of this email or any action taken in=20
>>> > > reliance on this e-mail is strictly prohibited and is unlawful.=20
>>> > > The recipient acknowledges that Conflux Technologies Private=20
>>> > > Limited or its subsidiaries and associated companies are unable=20
>>> > > to exercise control or ensure or guarantee the integrity of/over =

>>> > > the contents of the information contained in e-mail=20
>>> > > 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=20
>>> > > interest recalculation loans and found the following issues (on
>>> demo.openmf.org).
>>> > > All of the cases below have:
>>> > > - Interest recalculation on
>>> > > - Interest calculation =3D 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=20
>>> > > whether other people had seen these and there was a work-around=20
>>> > > by specifying the right params? Also when trying to debug some=20
>>> > > of this I think the calculations have now been made so=20
>>> > > incredibly complex that it is very hard to fix some of these=20
>>> > > without creating other
>>> bugs in exchange.
>>> > >
>>> > > *Daily interest on Same as Repayment period* On monthly loans,=20
>>> > > even though same as repayment period is selected, the interest=20
>>> > > calculation seems to happen on a daily basis. We see jumps up=20
>>> > > and down in the schedule, which should not happen especially=20
>>> > > before any payments are made, as in that case the interest=20
>>> > > calculation should be identical for each month (we are using=20
>>> > > same as repayment period) and therefore the interest amount=20
>>> > > should always drop month over month, with principal
>>> > going up.
>>> > >
>>> > > *Incorrect interest in Loan Schedule for first instalment when=20
>>> > > making an early payment* When setting up any interest=20
>>> > > recalculation loan, and making an early payment on the first=20
>>> > > instalment, this updates the schedule with all of it going to=20
>>> > > principal, leaving the interest outstanding. However the actual=20
>>> > > 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=20
>>> > > weekend day, it get's pushed forward, skipping that day=20
>>> > > correctly. However in recalculation this is no longer happening=20
>>> > > therefore introducing 2 installments on the same date one with a =

>>> > > 0 length. So what happens is pre-correction you have an=20
>>> > > instalment on the 3rd of December, then one on the 5th (skipping =

>>> > > sunday). After the payment and recalculation it has 2=20
>>> > > instalments due on the 5th, one with 0 days
>>> and no interest.
>>> > >
>>> > > *Single instalment loans do not recalculate* When a loan with 1=20
>>> > > instalment is created and the client prepays on that one=20
>>> > > instalment, interest is not recalculated.
>>> > >
>>> > > *Early payment of all principal throws an EMI error* When=20
>>> > > repaying the full principal due on the loan in an early=20
>>> > > instalment it throws an EMI error, which should not happen,=20
>>> > > there is still a bit of interest to pay, but no more principal.=20
>>> > > This means the schedule should just show that interest remaining =

>>> > > (or close the loan as there
>>> is no interest).
>>> > >
>>> > >
>>> > > Thanks,
>>> > > Sander
>>> > >
>>> > >
>>> >
>>> >
>>>
>>>
>>
>