Floating Rate Index

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Floating Rate Index

The interest rates can be fixed or be variable for the term of a loan contract. The variable rates of interest also known as the floating interest rates are calculated based on the Floating Rate Index. This index is determined by a regulatory body. You can set up the floating rate index with different rates for different date ranges, and specify the margin rate at the product level, to arrive at the applicable floating interest rate.

Floating Interest Rate =  Floating Rate Index + Margin Rate

To set up floating rate index:

  1. Log in to your Salesforce account.

  2. Go to  (App Launcher) > Origination Configuration > Floating Rate Index.

  3. Select New and specify a name for the floating rate index.

  4. Mark the floating rate index as Active, and then select Save.

  5. Go to Related and select New.

  6. Specify the following details and then select Save:

    Field NameDescription
    Start Date

    This specifies the date from which the interest rate is valid. Only one floating rate index can be defined for a given date. If you provide a date for which a floating rate already exists, an error message is displayed.

    Example: The following two floating rate indexes are defined:

    • On March 1, 2013, the rate percentage is 10.

    • On April 1, 2013, the rate percentage is 15.

      So, the rate percentage of 10 is effective from March 1, 2013 until March 31, 2013, and the rate percentage of 15 is effective from April 1, 2013, until the next Start Date is specified.

    RateThis field indicates the interest rate that is to be charged to the borrower.
    Floating Rate IndexThis field is auto populated with the created floating rate index.

Associate a Floating Rate Index to a CL Product

While creating a CL product, associate a floating rate index with it. This rate gets defaulted to all the applications associated with the CL product, but can be modified at the application level.

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