Delinquency on the basis of balance records

Balance is the total amount that is due to the borrower as on a particular date.

The balance that is expected to be due on a borrower, as per the original repayment schedule, is listed under the Balance tab. The actual balance due on a borrower is calculated as the total of (principal remaining, interest posted, fee remaining, and fee capitalized). The difference in the two amounts is used to determine delinquency on a loan.

Prerequisites

The following are the prerequisites to calculate the balance amount:

• The loan must be an interest posting loan.
• The interest posting frequency must be the same as the loan repayment frequency.

The following are the prerequisites to determine delinquency:

At the loan contract level, in the Delinquency Basis list, Balances must be selected.

References

The following terms are used as references to explain the concepts:

• x is the date as on which the delinquency is to be determined.
• x-1 is used to refer to the record previous to x as per the repayment schedule.
• x-2 is used to refer to the record previous to x-1 as per the repayment schedule.

The repayment schedule in the following image is used as a reference to explain the concepts.

Determine Delinquency

This section describes how to determine delinquency on a date.

To determine if a loan is delinquent as on May 22nd, perform the following steps:

1. Calculate the actual balance on May 22nd. Let us assume that it is 9,000.

2. Check the expected balance as on x-1.

   In this example, x-1 is May 17th and the expected balance is 8,965, as per the repayment schedule (refer to the image).

3. Check if the actual balance is more than the expected balance. If yes, then the loan is delinquent.

   In this example the loan is delinquent as on May 22nd because the actual balance as on May 22nd is more than the expected balance as on May 17th.

Calculate Delinquency Amount

Delinquency amount = Difference between the actual balance as on a date and the expected balance on the date prior to that date.

In this example:

• Difference between actual balance as on May 22nd and the expected balance as on May 17th.

• Delinquency amount is: 9000-8965 = 35

Determine Delinquency Days

Using the balance records, you can calculate the number of days a loan has been delinquent for.

To calculate the delinquency days as on date x, perform the following steps:

1. If the loan is delinquent as on x, then check if the loan is delinquent as on x-1.

2. If the loan is delinquent as on x-1, then check if the loan is delinquent as on x-2

3. If the loan is delinquent as on x-2, then check if the loan is delinquent as on x-3.

4. If the loan is not delinquent as on x-3, then count the number of days between x-2 and x.

   The number of days are the delinquency days.

Example

To understand this example, refer to the image in the previous section.

1. The loan is determined to be delinquent as on May 22^nd so check if the loan was delinquent on May 17^th.

2. The loan is delinquent as on May 17^th so check if the loan is delinquent as on May 1^st.

3. The loan is not delinquent as on April 1^st, so count the number of days between May 1^st and May 22^nd.

4. This loan has been delinquent for 22-1 = 21 days.