Virtual deposits

Overview

With CL Loan, the lenders can give their borrowers the benefit of having virtual deposit accounts with them and using those for doing transactions on the loan. These accounts are virtual but can be used by the borrowers to do actual transactions, which means that the borrowers can choose to have any excess amount that they pay toward the loan, to be deposited in these accounts. On this excess amount, they earn interest at a rate set by the lender. Borrowers get the benefit of paying less interest to the lender than they would pay in the absence of these accounts because the interest charged on the loan gets reduced by the interest earned on the amount in their virtual deposits.

Configure the virtual deposits

1. Create a loan. While creating a loan, select Deposit in the Payment Application Mode list.

2. Create a contract with the loan product created in the previous step.

3. Disburse the loan.

4. On the CL Contract page, in the Deposit Details section, click Deposit Adjustment.

   

   The Change Deposits page opens.

5. Provide the details as explained in following table and then select Add.

   Note:

   You can refer to the image following the table as an example.

   Field	Action
   Transaction Date	Enter the date on which this deposit is to be created.
   Deposit Payment Offset Days	Enter the number of offset days after which the deposit amount must be considered for payment in case of failure of default payment setup like APS.
   Adjust Deposit Amount in Payoff	Select this checkbox if you the system to consider the deposit amount for this deposit in payoff.

   

6. Provide the details as explained in the following table:

   Note:

   You can refer to the image following the table as an example.

   Field	Action
   Deposit Amount	Enter the amount to be added in the Deposit account. For example, you can enter $5,000. The deposit account can start with zero amount also.
   Deposit Rate	Enter the rate at which the borrower earns the interest on the deposit amount. For example, you can enter 10.
   Priority	Enter the priority number. This is an optional field and is used to prioritize multiple deposit accounts. In such a case, the withdrawals are made from the accounts in the decreasing order of priority. Deposits are always made to the account with the highest priority. You can change this. For example, you can enter 2. By default, the system provides the priority in the order of creation.

   

7. Select Validate and then select Save.

Example

Let's assume that a loan is disbursed with the following details:

• Loan amount = $5000

• Deposit amount = $0

• Deposit rate = 3%

The repayment schedule for the loan contract is listed, as shown in the following image.

Scenario 1: A payment of more than the due amount is made.

The first payment is made of $2007.51 that is more than the due amount ($1007.51), as per the repayment schedule. So, the excess amount paid ($1007.51-$1007.51 = $1000) goes to the virtual deposits account on the payment date, as shown in the following image.

Scenario 2: The next payment is not made by the Deposit Payment Date, so an internal transfer is made from the virtual deposits account to satisfy the due amount.

Scenario 3: A deposit of $1000 is made to the Virtual Deposits account using the Deposit Adjustment button on the contract page. An OLT is created for the deposit action, as shown in the following image.

Scenario 4: Payoff is done using the deposit amount.

 The total payoff amount is calculated by subtracting the total deposit amount from the original payoff amount, as shown in the following image:

Field reference table

If you are upgrading, you need to add the following fields to your layout: