Rounding Off
Rounding also applies to all API based transaction processing. This includes creation of loan contract, disbursement schedule, investment booking and investment orders, and activation/deactivation of IOs.
Rounding Behavior for Different Transaction Types
| Transaction Type | Rounding Calculation |
|---|---|
| Disbursal | Disbursal amount and, as a result, principal remaining is also rounded. |
| Payments | The fee and interest amounts (calculated by system) to be satisfied by the LPT are also rounded values. Rounded values of Interest Remaining and Interest Accrued Not Due are updated according to the specified rounding, and unrounded interest balance is stored for internal calculation. Fees remaining and Principal remaining fields are automatically computed as rounded values. |
| Fees | Fee amounts of all types are rounded. However, rounding error is not captured for any fee record. |
| Payoff Calculation | Payoff amount is calculated first with exact values then rounded to specified rounding precision. |
| Accrual Calculation | When the accrual field is updated, the amount from the last accrual date till the current date is rounded and stored in the system. This avoids any unrounded amounts from getting introduced due to settling of unrounded due interest whenever a payment is received. To calculate accrual from the LAD to any specific date, the Interest Accrued field adds any unadjusted interest and then rounds off the value. Similarly, the system tracks any unrounded balance that has not yet accrued to avoid rounding errors due to the change in the LAD. In case of flexible AMZ loans, the system uses the same logic in the interest posting transactions of a loan. |
Rounding Methods
A rounding method defines the method to be used for rounding of the amounts for any new lending product that you create. It is used to give input to Financial Calculator. By default its value is set to Nearest with carried over for new products. If you select Nearest with carried over, you must also specify the Digits after Decimal ito define the rounding precision.
Digits after Decimal specifies the number of digits after decimal that would be used in rounding, and by default, the value is 2.
CL Loan provides you with the following three types of rounding methods, and you can select any one of them:
Nearest with carried over: This is the default method selected in a loan product.
Note:For more information on this rounding method, see the Nearest With Carried Over Rounding Method section.
Round Up
Round Down
| Rounding Methods in a Lending Product |
|---|
|
If a rounding method is selected, all Principal, interest and EMI amounts are rounded while calculating the repayment schedule. However, if a value is not selected and the rounding method is changed to blank at the time of product creation, then rounding occurs based on the Rounding Mode selected in Custom Settings > Org Parameters as highlighted in the following image:
| Rounding Mode in Org Parameters |
|---|
|
| Value Before Rounding Off | Rounding Method | Digits After Decimal | Amount After Rounding Off |
|---|---|---|---|
| 10.56888 | Nearest with carried over | 2 | 10.57 |
| Round Up | 2 | 10.57 | |
| Round Down | 2 | 10.56 |