AALendingAdvancedPart1 PDF

AA Lending Advanced - Part 1
Temenos University - November 2012 1


The AA Lending Product Line provides a flexible framework that allows a number of new
lending products to be created. This provides a business component based architecture
for the management of lending products.
The aim of the course is to expand our knowledge of the various Properties and Product
Conditions belonging to the AA Product Line.
In this course, we will be looking at creating properties and product conditions and test
those on the lending Products.


Arrangement is an agreement between the bank and interested party to provide an

agreed service. AA module provides ability to create and manage arrangements for
customers. AA loans support repayment of principal and interest during the loan period
or Interest during the loan period and Principal at the end in one shot, as a bullet
payment. Under the first type, late start of principal is allowed.
Redemptions could be either Constant or Annuity type, Linear type, Actual or user
defined. Under Constant type of loan, instalment amount is same throughout the
tenure with Principal and Interest components varying in each instalment. Under Linear
type, Principal component of instalment is same throughout, with interest component
coming down gradually resulting in varying instalment amount.
T24 allows fixed, floating or a banded mix of fixed and floating interest rates for this type
of loans. In case of banded mix, the weighted average of the band is applied for the
entire loan.
Under floating rates, when interest rates change, the term could be retained the same
so that the installments would change or the installment could be retained the same so
that the term changes.

Arrangement is a record created from the associated loan product. The

conditions set for the associated Loan Product are defaulted into the
Arrangement when created. User can negotiate or override these conditions and
set them differently for the arrangement, if allowed. It is possible to
automatically track the changes in the original Product Conditions and update
the defaulted values in an Arrangement.
Conditions with which the arrangement is created are called Arrangement
Conditions. An arrangement can be created with a back value date or a forward
value date. Currency is mandatory for Loan arrangements. A Loan arrangement
is a commitment type which can be drawn by ways of loans.
When a financial arrangement is created, T24 will generate an Account record,
which maintains all activities in the loan. This account is going to be used for AA
loan from start to end. Disbursement can be allowed in one shot or in parts.
When payments are due, Bills are generated. Repayments can be more than or
less than the bill amounts. Excess or advance payments can be adjusted to
principal not due or kept in credit in the arrangement.
After creating a new arrangement for loan, there are occasions, when a customer
does not want to proceed with the loan and wants to cancel the same. After the
arrangement has been cancelled, the arrangement account needs to be closed.
At the cancellation stage, status of the arrangement would be updated to
PENDING.CLOSURE. System would schedule the closure activity based on the
closure period in CLOSURE property condition. An account closure record will be
created for the arrangement.


Any Loan Product will have common features like Amount, Interest, Charges, Dues,
Overdues, and Activities like disbursement, repayment, change of conditions, etc.
Each lending feature is embedded as Attribute in Property Classes and listed in Lending
Product Line.
The functional Property Classes include CUSTOMER, ACCOUNT, ACCOUNTING,
TERM.AMOUNT, INTEREST, CHARGES & PAYMENT.SCHEDULE. For each functionality, we
can specify rules, for example, how repayments be apportioned, activities be restricted,
accruals be triggered, capitalised, billed etc.
Besides the property classes listed in the slide, we have many more. Trainees are
advised to view all property classes of LENDING Product Line.

CUSTOMER is a mandatory Property Class of LENDING Product Line. It is used to specify

the involved parties of an Arrangement and their respective roles.

Customer Property Class is used to specify the involved parties of an Arrangement and
roles for other parties.
It is primarily an Arrangement level class i.e. values input at Arrangement level and is
typically configured at the Product Level as fully negotiable.
There can be more than one owner to an Arrangement. When a New Arrangement
Activity is validated with Customer and Currency, the customer of the New Arrangement
Activity is automatically defaulted as primary owner of Arrangement and also
automatically defaulted in the list of other owners. User can add any number of other
owners provided the attribute is negotiable.
Each arrangement can have one or more legal Owners. The Primary Owner is the one
used by T24 for accounting, reporting purposes and limits. Limit of primary owner alone
can be attached to an Arrangement.

Additionally, Other Parties may be added to an Arrangement with a designated Role e.g.
Guarantor, authorised signatory etc.
Roles of other parties should be defined in AA.PARTY.ROLE Virtual Table in EB.LOOKUP
File.
All Owners and any Other Parties must exist on the T24 CUSTOMER table.

When a New Arrangement Activity is validated with Customer and Currency, the
customer therein is automatically captured into primary owner field and becomes the
primary owner of the Arrangement. Primary owner is also automatically defaulted in the
list of other owners. User can add any number of other owners, provided the attribute is
negotiable.

The PRIMARY.OWNER for an arrangement can be changed through activity under

LENDING-CHANGE.PRIMARY-CUSTOMER Activity Class.
Primary owner can be changed with any valid T24 Customer. Limit sanctioned to Primary
owner alone can be used in Arrangement.
When an arrangement is set with a Limit and the Primary Owner is replaced with other
customer, system will validate the limit of the new Primary Owner.
If Limit is not available for the new Primary Owner, an Error message will be
encountered. User must create a new Limit for the new Primary Owner or remove the
Limit from arrangement.

OFFICERS is an optional Property Class of LENDING Product Line. The ACCOUNT.OFFICER

is an important mandatory field in an Account and the value input will be updated in the
Account automatically created for the Arrangement.

The PRIMARY.OFFICER is the main Officer responsible for the Arrangement. This officer is
copied onto the underlying account record.
The input in an Arrangement will update the ACCOUNT.OFFICER Field of the AA Account
record. The Account Officer value of Accounts is useful to consolidate balances and
report them under Department/Account Officer-wise. This information is also used by
Management Information purposes to report average balances, profitability, etc. by
Account Officers.
Additional officers who can assist with a Product/Arrangement or those will be
responsible in the absence of Primary Officer can be specified in the multi-value
OTHER.OFFICER Field. The value input here will be defaulted in the OTHER.OFFICER Field
of AA Account.
The role of Other officers can be input in the field ROLE.
The Roles of Other Officers should be a valid value in virtual table AA.OFFICER.ROLE,
which can be maintained using the EB.LOOKUP File.
If there is no input in an Arrangement, the value of ACCOUNT.OFFICER is defaulted from
Primary Customer record. Thus, the OFFICERS is only an optional Property Class of
LENDING.
PL REPLACE THE OFFICER ROLE SCREEN SHOT WITH ONE OF THE RECORDS(HERE
SHOULD BE APPLICATION) OF AA.OFFICER.ROLE

Create an Officers Product condition with the following settings:

Set the following rules :
For Other Officer Use codes “20 “ and “21” and role as “Application” and
“Approval” respectively
Set DEFAULT.NEGOTIABLE to Yes


LIMIT is an optional Property Class of LENDING Product Line.

It is used to specify the Limit Product, and other attributes for the Limit that can be
attached to a Lending Arrangement.

LIMIT.REFERENCE Field is used to input a limit reference of the Primary Owner.

A Limit Record should have been already created for the primary owner of the
Arrangement for the specified Limit product. Unlike other contract applications, T24 will
not automatically create a Limit for the Primary Owner.
If no limit reference is specified, and the working balance goes into debit, an override
message for unauthorised overdraft will be displayed for approval. If a Limit exists, it will
be checked for availability, and an Override will be displayed if there is an excess
drawing.

SINGLE.LIMIT Field is used to define whether the Limit listed in "LIMIT.REFERENCE" is for
exclusive use of the Arrangement Account. If set to Yes, the limit is for use by only one
arrangement Account. Option No is to share limit among arrangement accounts.
ALLOW.NETTING Field: If the account does not exclusively use a Limit, the user can
specify that any credit balance of the account can be added to the overall overdraft limit
available to other accounts with the same limit reference.

In this example, we are showing how a limit record is created and attached to the
Arrangement.

In this workshop, we are going to create a Limit Product Condition.

Set the following rules:
Limit can be shared. Netting allowed
Set LIMIT.REFERENCE attribute negotiable
All other attributes are not negotiable


TERM.AMOUNT is a mandatory Property Class of LENDING Product Line. This Property is

useful to input the values of Term (Period) of the Arrangement and its committed
Amount

The Term Amount property class represents both the amount committed within the
Arrangement and the term of that Commitment.
This property class controls the commitment made by the bank and the customer.
Term Amount is Currency specific, dated and Non Tracking.
For a Product Condition linked to Term Amount in a Lending Product, you must create a
Condition for each allowed Currency of the Product

TOT - Total Commitment Balance

The total loan Commitment amount which will be lent for the term.
CUR – Current Commitment Balance

For a loan contract this will reflect the available amount of the loan commitment
available for disbursal. This balance would normally be reported as a contingent balance
type and will be a negative (contingent asset) figure.

In an Arrangement, the AMOUNT Field is used to enter the total amount called
commitment amount which will be lent. The amount can be restricted in the Product
Condition through appropriate negotiation rules (e.g. >5000 and < 25000).
The TERM field determines the period of time by which the amount must be repaid. It is
common to specify a default value for this in the Product Condition, for example 25Y for
a long term Mortgage. The term can be entered as a number of Days (D), Weeks (W),
Months (M), or Years (Y).

CHANGE.AMOUNT Field, in arrangement, is used to increase or decrease the

commitment amount. Original commitment amount can be increased or decreased
using INCREASE or DECREASE action, in an arrangement. For increase action, input in this
field should be greater than zero.
For decrease action input in this field should be less than zero.

The MATURITY.DATE at the Arrangement level is calculated. This is based upon the
Arrangement Effective Date and Term. User can also manually enter the MATURITY.DATE
instead of defining the TERM of the arrangement.
Unlike other T24 Contract applications TERM will be applied on the first repayment
date to arrive at the last repayment date, and the Maturity Date will not be last
repayment date.
Maturity date can be changed at the arrangement level. If maturity date is changed then
TERM will be calculated in DAYS format.
If TERM is changed and maturity date has to be recalculated then existing maturity date
should be cleared.

Available amount is the committed amount less all disbursements.

This is controlled by the Revolving Attribute.
The effect of a revolving product is to increase the available amount from which a
customer may drawdown as a result of certain payments. If a user wishes to have a
revolving loan or line of credit there are two possible revolving types.
PAYMENT – any payment against the outstanding principal (due or not due) will result in
the available amount increasing. Typically this setting would be used for fully revolving
credit facilities.
PREPAYMENT - only repayments against the outstanding principal (balance not yet due)
– such as an ad-hoc payment will result in the available amount increasing. Repayments
against due will not reinstate the committed amount. Typically this setting would be
used when a product allows over payment and subsequent redraw of the overpaid
amount.
NO – the available amount will not increase when any repayment of principal is made.

UPDATE.COMMT.LIMIT Field - attribute for lending products allows a user to specify

whether the commitment amount of an Arrangement’s LIMIT record needs to be
updated, for an Arrangement when the initial commitment is granted. A setting of YES
will result in the reduction of the limit available to the customer before any disbursal
takes place.
When disbursal takes place the limit is always updated for the loan irrespective of this
setting. If this field is set to YES at disbursement time the limit will be updated to reflect
that the disbursed amount is an available amount and not committed.
ON.MATURITY Field determines whether on Maturity Date of the arrangement, the
remaining amount in outstanding balance to be kept as Due or Outstanding.

CANCEL.PERIOD –The Period after which if full committed loan amount is not availed by
the customer, system triggers cancellation of loan. The number of days is calculated
from arrangement start date, after which, if full disbursement is not made from the loan
arrangement, system would schedule the activity LENDING-CANCEL-ARRANGEMENT
which would trigger the cancellation.
It is possible to generate a pre advice by specified number of days in advance to indicate
pending cancellation of the arrangement, if the contract is not fully disbursed.
This is effected through ACTIVITY.MESSAGING property which has associated multi-
value fields PRE.NOTICE.ACTIVITY and PRE.NOTICE.DAYS.
PRE.NOTICE.ACTIVITY Field controls the activity for generating the advice for an Activity,
say, LENDING-CANCEL-ARRANGEMENT. The field PRE.NOTICE.DAYS controls the time in
advance when the notification will be produced. To know more about Activity Messaging
Property Class, please refer to AA Technical course.

CANCEL.PERIOD - The number of days is calculated from arrangement start date, after
which, if full disbursement is not made from the loan arrangement, system would
schedule the activity LENDING-CANCEL-ARRANGEMENT which would trigger the
cancellation
In this example the Arrangement Start date – 26th January 2012 and the cancel period is
7 days so the Cancel Date updated as 02 February 2012 which is 7 working days from
Arrangement start date.

Arrangement is pre-closed using the activity LENDING-CLOSE-ARRANGEMENT. If this is

done within the Cooling period specified no interest will be calculated for the principal
amount. Charges that are levied will also be returned back to the customer.
Cooling period field will indicate the period within which the customer can pre-close the
arrangement. The term can be entered as: Days (calendar1) (nnnnD), Weeks (nnnnW),
Months (nnnnM), Years (nnY). This value is also stored in the file AA.ACCOUNT.DETAILS
file in the field COOLING.DATE in a period format.
There may be cases where schedules can be configured and get processed before the
cooling period has expired. Any interest, charges or principal amounts that has already
been made due to the customer within this cooling period will have to be paid by the
customer during the Pre-Closure calculation and the due balances will not be reversed.
Whenever a schedule is configured to do an activity before the cooling off period a
suitable OVERRIDE is produced at the arrangement level and also at the funds transfer
stage to notify the user.

Some Loans may be considered as Call products. TERM and MATURITY.DATE fields are
optional while configuring the Term Amount Product Condition and at the arrangement
capture stage. If the Property CHANGE.PRODUCT is not configured in the product and
the TERM and MATURITY.DATE Fields are not specified then this is considered to be a call
type arrangement. The CRF reporting will report the contract as such.
If CHANGE.PRODUCT Property is configured in the product and a value is specified in
either CHANGE.PERIOD or CHANGE.DATE Field, then this is considered to be a fixed term
loan with either of these values being taken as the maturity date which will renew either
automatically or manually on this date. Thus it becomes a Fixed Term rollover product.
For a rollover, we can specify the final maturity date through the activity LENDING-
CHANGE.TERM-COMMITMENT. Once this activity is run , TERM and MATURITY.DATE can
be entered, the contract will then finally mature on this date.

Disbursement is the process to part with the committed loan amount in full or in part.
Unlike some contract applications of T24 like MG, MM, etc. disbursement is not
automatically done when an Arrangement is created. It cannot be also done directly
from the Arrangement similar to other Activities like increase Term Amount.
The disbursement can be made to a specified Account or it can be even in cash.
The disbursement can be triggered from a transaction with a disbursement transaction
code. We will learn more about configuring the transaction codes to use with AA later. A
Lending Arrangement can be disbursed through FT, Teller, Cash Pooling.
It also validates the disbursement against the committed amount, the current
outstanding amount and any applicable Activity Restriction. Please note that an
Arrangement Account will not show any working balance when an Arrangement is
created, since amount is only committed. Only when a disbursement is made, the
Arrangement Account will be debited and its working balance will be updated.

Create a Term Amount Product condition for a term loan product with the following
settings:
Set default amount to 40,000 which can be changed to a minimum of 20,000,
but not less and to a maximum of 200,000 and above with overrides
Default term is 3 years which is negotiable between 1 and 5 years
Term below 1 year can be allowed but beyond 5 years not to be allowed
If the total loan amount is not withdrawn by the customer within 5 days of
opening, the loan arrangement should be cancelled
Commit the record

In this workshop, we will see how to create a Term Amount Product condition for a term
loan product:
Set default amount to 40,000
Default term is 3 years
If the total loan commitment amount is not withdrawn by the customer within 5
days of opening, the loan arrangement should be cancelled
Amount can be negotiated to a minimum of 20,000, but not less and to a
maximum of 200,000 and above with overrides
Term is negotiable between 1 and 5 years, below 1 year can be allowed but
beyond 5 years not to be allowed

Create an arrangement for your customer for an amount of USD 12000 for a period of 2
years. Back date the arrangement more than the defined cancellation period for
example 15 days.
Look at the settlement instructions and input the payin account with T24 Account or
Arrangement account and Commit the Record
Get the record authorised and view the status of the Arrangement

In this workshop we are going to create a back dated arrangement (more than the
defined cancellation period) for your customer.

Input the Commitment amount as USD 12000 and Term as 2 years and View the Cancel
period it is kept as 7 Days
Select the Repayment Instructions and input the payin Account as your Customer T24
Account/Arrangement Account

Get the Record authorised and View the Arrangement Status, as no disbursement was
made before the Cancel period the system triggered the Cancellation Activity (LENDING-
CANCEL-ARRANGEMENT) and updated the status of the arrangement as Cancelled.

ACCOUNT is also a mandatory Property Class of LENDING Product Line. When an

Arrangement is created for a Lending Product, T24 will automatically create an Account,
which will be used to maintain the balances of the Arrangement.

ACCOUNT Property Class is Dated. This property class holds principal balances of an
arrangement.
All attributes in the Account property are stored at the arrangement level and do not
track the underlying product.
Property class manages the descriptive and classification details of the Arrangement and
is used in the creation and maintenance of the account record that is related to the
arrangement.

The Account property has associated financial balances that reflect the arrangement
principal in the various stages of the arrangement life-cycle.
Current Principal Balance
The current principal is identified with a prefix of CUR.
The current principal reflects the amount that has been disbursed and is not yet due to
be repaid.
Due Principal Balance
The due principal is identified with a prefix of DUE.
Due principal reflects the amount of the loan that has been disbursed and is now due for
repayment.
Aged Principal Balance
The aged principal balance reflects the due amounts of the loan that has aged according
to the stages defined in OVERDUE product condition.
For a single arrangement there may be several aged balances reflecting the different age
of the outstanding bills.
The aged principal balance is identified with a prefix of the associated status in the
OVERDUE property
Unallocated Credit Balance
The unallocated credit balance is identified with a prefix of UNC.
The unallocated credit balance reflects general credits made to the arrangement. This
balance is also used to hold payments made against future or issued bills in advance of
the due date. If the advanced payments made by the customer, should not settle the
current principal balance then the repayment amount is allocated to the unallocated
credit balance.

Unallocated Debit Balance

The unallocated debit balance is identified with a prefix of UND.
The unallocated debit balance reflects general debits made to the arrangement.

When you open a Customer Account in T24, three fields are mandatory which are
Customer, Category and Currency. Of these the Customer and Currency will be supplied
by the mandatory values input first for a Lending Arrangement. So only Category needs
to be specified for an Arrangement once it is validated with the Customer and Currency
values.
A T24 Customer Account can be opened only in the Category range of 1000-9999.
Category, which is used to distinguish T24 Products, is an important field of Account, and
financial reporting is usually based on T24 Product Categories. Some of the Account
Categories are reserved for Nostro, Vostro Accounts. Hence, normally the Category will
be set as a non-negotiable attribute in an ACCOUNT. Product Condition, with a default
value i.e. Category value will be defaulted in the Arrangement and User cannot modify it.
This will help to group AA Lending Products in a meaningful manner for financial
reporting. Of course, though any Category in the range 1000 to 9999 can be specified
here, care should be taken to avoid Categories, which are reserved for other types of
Accounts like Vostro, Nostro, etc.

At the arrangement level, Predefined Posting Restrictions defined in (POSTING.RESTRICT)

can be used. Debits or Credits or all transactions could be set to attract overrides.
ACCOUNT.TILE used to describe the specific account
ACCOUNT.TITLE and SHORT.TITLE is defaulted from the product definition and can be
overridden if allowed by the product attribute negotiation rule settings

CURRENCY Field indicates the currency of the account and all entries posted to this
account are in this currency. Value in this field is defaulted with currency of New
arrangement activity. Once arrangement is authorised, value in this field cannot be
changed.

BASE.DATE.TYPE Field is a no change field at the arrangement level. It indicates if

Anniversary field should be from agreement date or from first disbursement date(start).
If Start is selected, then system will maintain the MMDD of the arrangement start date
in Anniversary until the first disbursement happens and then overwrites Anniversary
with the MMDD of first disbursed date. Option AGREEMENT would commence
calculation from date of arrangement. Option START would commence calculation from
first disbursal date. A point to note is that cooling off period functionality of Term
Amount property is applicable for rollover only when this field is set to AGREEMENT.
ANNIVERSARY field can be used to store the anniversary of the account for restriction
purposes and its value is stored in the format MM DD.
PORTFOLIO.ID Field is available in product condition (not in MB version) wherein, it

should be left blank and negotiable. This field can be used at arrangement level to input
the portfolio number of the Customer. This will link the customer’s Loan arrangements
to his Securities portfolio, thus reflecting in the Securities valuation enquiry information
like nominal amount, interest rate, maturity date and accrued interest rate to date. A
drill down to the underlying contract is also available. Please note that an arrangement
will become active in a portfolio only after a disbursal of the Loan has been done.
Further, any kind of changes made in the disbursed loan like change interest, payoff or
closure, increase of term amount, term etc., will clearly reflect in the portfolio indicating
movement of funds.
The valuation can be viewed by running the on line ENQ SC.VAL.COST

BUS.DAY.CENTRES : By default, T24 will check the holiday schedule for country of an
arrangement currency to determine non-working days. You can add additional countries
(Business Day Centres) whose calendars must be checked with regard to holiday.
DATE.CONVENTION : Date Convention and Date Adjustment settings indicate the action
which will be taken if the derived date is a non-working day. Options are:
Backward – the payment date will move backward to the previous working day.
Forward – the payment date will move forward to the next working day.
Forward Same Month – the payment date will move forward to the next working day
provided it is within the same month. If it is not within the same month, the payment
date will move backward to the previous working day.
Calendar –payment date will not move regardless of working day.
DATE.ADJUSTMENT Field is used for all date conventions except for Calendar. Date
Adjustment is used to specify whether new date will represent an adjustment of the
‘Value’ date of the entries (Actual payment date does not get adjusted) or an adjust of
the ‘Period’ (Actual payment date gets cycled).

Account is required for all financial Arrangements. It holds the Principal balance of the
Arrangement.
When a financial arrangement is created the system will generate a T24 account record.
ACCOUNT record holds the arrangement number in the ARRANGEMENT.ID field.
Each account in T24 has an account number, the structure and validation of which can
be configured in COMPANY table. This information, including check digit, bank number
prefix and account mask is then used to auto generate each account number. ACCOUNT
application is used for generating this main account number. While creating an
arrangement, ACCOUNT application will automatically generate an ID based upon the
parameters in COMPANY. This account number is stored in AA.ARRANGEMENT.
The ACCOUNT record created cannot be modified directly using the ACCOUNT
application
It is not recommended to update the Category of an account. If you want to change the
Account to a different Category, it can be done through the CHANGE.PRODUCT Activity.
User can amend the account title, short title, posting restriction and account mnemonic.
The Account number which has been automatically created cannot be changed.

Create a new Account Product Condition


In this workshop, we will see how to create an Account Product condition.

Use Category Code 3102
Set Base Date Type to AGREEMENT
Fill in ACCOUNT.TITLE and SHORT.TITLE Fields with title names you
desire
CATEGORY must be NON-NEGOTIABLE
All other attributes, by default are Negotiable

In this workshop, we are going to create CUSTOMER.SECURITY and SECURITY PORTFOLIO

for your customer
Include individual customer created earlier as an investor of securities
• Currency : USD
• Choose any desired values for Portfolio Program and Management
Account from the dropdown list
• Use a suitable account name for the portfolio
• Use USD account of your customer as Account No. and Safekeeping
Account

Create an Arrangement and attach the PORTFOLIO.ID in the Arrangement of the

customer

In this workshop, we are going to create an arrangement to attach the PORTFOLIO ID

created in to the Loan Arrangement
Input an Arrangement for USD 100,000 for 1 years for your individual customer
Now mention the Portfolio ID created for the customer in the Portfolio ID of the
Account property in the Arrangement
Commit and accept overrides, if any
Get the record authorised.

Loan arrangement is not updated in the Portfolio as Disbursement of the loan has not
been done.

Disburse the Loan Arrangement created in the previous workshop

In this workshop we are going to Disburse the loan,

• Disburse USD 100,000 to the Arrangement opened in the Previous Workshop
• Approve Overrides
• Get the record authorised

View the Loan Arrangement added in to the Portfolio ID of the customer after
disbursement

View the loan arrangement included in your portfolio after disbursement

ACTIVITY.MAPPING is a mandatory Property Class of LENDING Product Line. This

Property is used to map the T24 Transaction Codes to various Lending Activities, such
that other T24 Applications like FT, Teller, etc. can be used to trigger Activities related to
an Arrangement like disbursement, repayment, etc.
This definition can only be defined at the Product Level and is not available for
configuration at the arrangement level.

Only one Property of ACTIVITY.MAPPING can be attached to a Product Group.

Since its Type is set to TRACKING.ONLY, the Arrangement level values will always track
changes to the Product Condition. Further, its values cannot be viewed or edited at the
Arrangement level.

TRANSACTION Field in ACTIVITY.MAPPING product condition is used to specify the

Transaction code of External application to triggerd a specified AA Activity set in the
ACTIVITY Field.
TXN.ACTIVITY – Transaction Activity Field is used to specify the activity that will be
performed against an arrangement when a movement with the associated
TRANSACTION code is posted from an external application to an Arrangement Account.
This field is part of a multi value set with TRANSACTION Field.

Besides specified Codes mapped to trigger specific AA activity, AA Activities to be

triggered by default for unmapped transaction codes are set for Debit and Credit
Separately.
The list of activities that can be specified for the DEFAULT.CR.ACTIVITY,
DEFAULT.DR.ACTIVITY and TXN.ACTIVITY are indicated in the TYPE field of the
AA.ACTIVITY.CLASS, that underlies the AA.ACTIVITY record.
To specify the ACTIVITY the following TYPE definition must be present in
AA.ACTIVITY.CLASS:
TXN.ACTIVITY – DEBIT or CREDIT
DEFAULT.DR.ACTIVITY – DEBIT
DEFAULT.CR.ACTIVITY – CREDIT

Let us take an example of using FT to disburse an Arrangement. FT transactions are

controlled by its parameter table FT.TXN.TYPE.CONDITION. Here a record ACDI has been
defined for the AA disbursement and a transaction code of 850 is linked to it for both
debit and credit.
In the ACTIIVTY.MAPPING Product Condition linked to a Lending Product, the
Transaction Code 850 has been mapped to the Activity LENDING-DISBURSE-
COMMITMENT. This LENDING-DISBURSE-COMMITMENT Activity has been derived from
the Activity Class: LENDING-DISBURSE-TERM.AMOUNT. Please note here that
COMMITMENT property has been attached to the TERM.AMOUNT Property Class in the
Product Group.
You can see that the FT to disburse the Arrangement has been input with the
Transaction Type: ACDI and thus uses the Transaction Code 850 for both its debit and
credit processing. Thus, the LENDING-DISBURSE-COMMITMENT Activity has been
triggered.
The process works exactly the same in AC.CASH.POOL and TELLER.
In AC.CASH.POOL, the transaction codes are defined in AC.SWEEP.TYPE. For TELLER, it is
done in TELLER.TRANSACTION.

Create an Activity Mapping Product condition with the following Settings:

Map Transaction Code 850 to LENDING-DISBURSE-COMMITMENT activity
Map Transaction Code 851 to LENDING-APPLYPAYMENT-PR.PRINCIPAL.DECREASE
activity
Set LENDING-CREDIT-ARRANGEMENT activity to Default Credit
Set LENDING-DEBIT-ARRANGEMENT activity to Default Debit
Set DEFAULT.NEGOTIABLE to NO
Commit the record

In this workshop, we will see how to create an Activity Mapping Product condition.
Map Transaction Code 850 to LENDING-DISBURSE-COMMITMENT activity
Map Transaction Code 851 to LENDING-APPLYPAYMENT-PR.PRINCIPAL.DECREASE
activity
Set LENDING-CREDIT-ARRANGEMENT activity to Default Credit
Set LENDING-DEBIT-ARRANGEMENT activity to Default Debit
Set DEFAULT.NEGOTIABLE to NO
Commit the record

INTEREST is an optional Property Class of LENDING Product Line. This Property is used to
define the attributes for interest calculation.

Interest Property Class is used for all interest definition and processing in AA. A T24
product defined and processed in AA can have multiple interest properties defined like
Loan Interest, Penalty Interest or Overdue Interest. The number of interest properties is
determined by the users defining the products.

Three basic types of interest are supported by T24 Fixed, Floating, and Periodic. Each of
these interest types can include one or more margins and can be specified in a tiered
structure.
Fixed Rate - A fixed rate is directly entered by the user into field FIXED.RATE.

Floating Rate- A floating interest rate is tied to a variable base rate (i.e.
BASIC.INTEREST)and is entered in field FLOATING.INDEX. During interest calculations,
T24 will use the currency specific rate applicable for the calculation date (i.e. the rate
used for the calculation will change whenever the base rate is changed).

Periodic Rate - A periodic rate is tied to an index (e.g. LIBOR) which is dependent on a
period of time (e.g. term) and possibly an amount. The periodic interest index is entered
into field PERIODIC.INDEX.
To define a periodic rate, the user specifies:
PERIODIC.INDEX - For Periodic Interest type, rate applicable to the Arrangement Period
will be defaulted from the PERIODIC.INTEREST Table.This would be input as the 2 digit
number, eg 01 may indicate that the LIBOR rate should be used.
PERIODIC.PERIOD - If not entered the system would default values in the following
order:
• Manual input.
• Change Period from CHANGE.PRODUCT Property Class.
• Term defined in TERM.AMOUNT Property Class.
PERIODIC. METHOD - For Periodic Interest type, rate applicable to the Arrangement
Period will be defaulted from the PERIODIC.INTEREST Table. If the Term of the
arrangement is not matching with the periods defined in the PERIODIC.INTEREST Table,
System will calculate interest by Interpolating the rates available for different periods in
the Periodic Interest Table. This is the default option. Other available options are NEXT,
PREVIOUS and CLOSEST
You can set frequency for resetting the interest rates under PERIODIC.INTEREST type.
When the next periodic reset date (i.e. the interest reset activity) is computed and if it
happens to be a holiday, Business day definition fields in Account property would be
considered and the date would be moved to a working day just like a scheduled
repayment.

In this example, we will see an Interest product condition with type as Periodic.

T24 allows for the definition of tiers of interest rates. Each tier is specified by defining
the amount up to which the interest rate applies. Additionally, each tier can be of a
different interest rate type (i.e. fixed, floating, or periodic). There are three type of tiers.
RATE.TIER.TYPE Field has 3 options – Single, Level and Banded.
Single Rate - When a single rate tier type is specified a single nominal interest rate will
apply for the entire balance amount.
Level Rate - This will calculate interest at different rates depending on the balance
amount.
Banded Rate - Banded tier interest will typically result in a “blended” interest rate. This is
similar to Level tiers, but allows for the interest rate of each tier to be applied to the
portion of the balance that falls within the tier. Compounding not permitted for this.
Minimum rate and Maximum Rate for each tier can be specified.
MARGIN.TYPE – Identifies whether there are single or multiple margins.
MARGIN.OPERAND – The options are ADD or SUB or Multiply (i.e. the nominal rate is
[100+Margin]% of the specified interest rate). This indicates whether the MARGIN.RATE
should be added or subtracted from the Floating or Periodic Rate.
MARGIN.RATE - A margin rate is a spread that can be used to adjust the specified rate of
interest and to appropriately reflect any rate profit realized. The result is the nominal
rate of interest.
For each tier defined, minimum and/or maximum rate for the tier can be specified. This
is applicable for variable and periodic rates and allows the tier rate to be controlled.

We can calculate interest using a banded method where the bands are identified by a
percentage of the principal. Alternatively, different interest rates can be applied for
different amounts in each tier.
TIER.AMOUNT Field - The tier amount relates to the field RATE.TIER.TYPE and amounts
can be entered if either BAND or LEVEL is selected.
Different interest rates can be defined for different amounts in each tier, indicating Level
or Band calculation.
TIER.PERCENT Field – This allows a percentage of the principal to be allocated a specific
rate or be linked to a rate table. Different interest rates can be defined for different
percentage amounts, indicating Level or Band calculation. If TIER.PERCENT is defined,
then the Sum of Tier percentage should be 100%.
System will allow band based interest calculation on TIER.PERCENT or TIER.AMOUNT,
but not both.

AA uses the INTEREST.DAYS.BASIS for determining numerator and denominator for

interest calculations.
ACCRUAL.RU.E - The Accrue activity calculates the accrued interest amount up to the
effective date and posts the amount using the associated accounting rule.
COMPOUNDING - Interest could be set to compound every day, weeks (say every week,
every 2 weeks etc); monthly (every nMonths); twice a month and specified number of
times in a year. Compounding not allowed when Interest is banded.

CALC.THRESHOLD Field is used to specify that interest will only be calculated if a balance
threshold is surpassed. For debit interest, the user can specify the maximum debit
balance for which interest will not be calculated.
NEGATIVE.RATE Field is used to set negative interest rates on accounts in credit.
Negative interest rates may occur either as a result of a negative rate being specified or
as the result of the rate minus any margin which is specified.
There are 3 options (YES, BLOCK.MARGIN and NO/NONE)
If the field is set as either “No” or “None”, then negative rates cannot be input and if a
rate becomes negative as a result of the application of a margin the rate will be set to
zero.
If the field is set as “Yes” negative rates can be input. If application of margin makes the
rate more negative, then that final negative rate will be used.
If the field is set as “BLOCK.MARGIN” then negative rates can be used, but the following
conditions apply:
- If the rate is positive and the margin makes the rate negative then the rate will be set
to zero
- If the rate is negative and the margin makes the rate more negative then the margin
will be ignored and the original negative rate will be used

MIN.INT.AMOUNT - It is possible to specify a minimum interest amount to be charged

for an Arrangement. This can be done by specifying the value in this field. This minimum
interest specified will be compared with the accrued amount, and if the same is less
than the minimum, it can waived or charged, based on field MIN.INT.WAIVE.
If MIN.INT.WAIVE Field is set as YES, no amount would be charged, otherwise, the
minimum amount would be charged.
ON.ACTIVITY – Activity that requires resetting of Interest rate to be indicated here.
RECALCULATE – Options are Rate & Nothing. If nothing is opted, no recalculation
happens. If Rate is opted, system checks the BI rate table and retrieves a new rate.

The Interest Property Class is used for all interest definition and processing in AA. A T24
product defined and processed in AA can have multiple interest properties defined. The
number of interest properties is determined by the users defining the products. The
Interest Property Conditions are currency specific.
Changes to any of the Interest attributes may result in interest to be recalculated and
may cause update the Payment Schedule. An important feature in annuity (constant)
calculation type Arrangement is that if the interest amount for a certain period is greater
than annuity amount, then Interest amount equal to the annuity amount calculated is
made due for the period.

Create an Interest Product Condition with type as FIXED with the following Settings:
Default interest rate is 6% negotiable not down not below 5.5% but can go upto
6.5% with an override if maximum rule is broken
Use Interest Day Basis “B”
Interest accrual to include first and last day
Tier Type is SINGLE
Attributes are negotiable by defaul

In this workshop, we will see how to create an Interest Product condition with type as
fixed.
Default interest rate is set as 6%,
Tier Type is SINGLE,
Use Interest Day Basis “B”
Interest accrual to include first and last day
Interest rate cannot go below 5.5% but can go up to 6.5% with an override if
maximum rule is broken.
All attributes are negotiable by default.

Create an Interest Product condition with type as floating with the following Settings:
Use BASIC.RATE.TEXT Table 1
A default margin of 0.5%, negotiable but not below 0.25%. Also make the upper
limit 0.75% but can be allowed beyond with an override
Minimum and Maximum rates are 7% and 9% respectively
Use Interest Day Basis “C”
Interest accrual to include Last Day
Tier Type is SINGLE
Negative interest effect due to margin not allowed
Attributes are negotiable by default

floating.
Use BASIC.INTEREST Table 1
Single margin operand is Add with a default margin of 0.5%,
Minimum and Maximum rates are 7% and 9% respectively,
Use Interest Day Basis “C”,
Interest accrual to include Last Day,
Negative interest effect due to margin not allowed,
Margin is negotiable but not below 0.25%. Also make the upper limit as 0.75%,
can be allowed beyond with an override,
All Attributes are negotiable by default.

Create an Interest Product condition with type as Periodic with the following Settings:
Use Periodic Interest Table 90
Interpolate when Loan Term is between specified periods
Periodic Reset should happen automatically in once in two years
A default margin of 0.50%, negotiable down to 0.25% with an override if
exceeded. Cannot be negotiated beyond 0.75%
Negative interest can be input or negative margin can make the final rate more
negative
Use Interest Day Basis Table A
Interest accrual to include First Day
Tier Type is SINGLE
PERIODIC.PERIOD and PERIODIC.RESET are the only other negotiable attributes

Periodic.
Set the following conditions:
Use Periodic Interest Table 90
Interpolate when Loan Term is between specified periods,
Periodic Reset should happen automatically twice a year,
Single margin with Add operand for a default margin of 0.50% ,
Use Interest Day Basis Table A ,
Interest accrual to include First Day,
Negative interest can be input or negative margin can make the final rate more
negative,
Margin negotiable down to 0.25% with an override if exceeded. Cannot be
negotiated beyond 0.75%,
PERIODIC.PERIOD and PERIODIC.RESET are the only other negotiable attributes.



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AA Lending Advanced - Part 1

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Arrangement is an agreement between the bank and interested party to provide an

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Arrangement is a record created from the associated loan product. The

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CUSTOMER is a mandatory Property Class of LENDING Product Line. It is used to specify

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The PRIMARY.OWNER for an arrangement can be changed through activity under

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OFFICERS is an optional Property Class of LENDING Product Line. The ACCOUNT.OFFICER

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Create an Officers Product condition with the following settings:

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LIMIT is an optional Property Class of LENDING Product Line.

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LIMIT.REFERENCE Field is used to input a limit reference of the Primary Owner.

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In this workshop, we are going to create a Limit Product Condition.

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TERM.AMOUNT is a mandatory Property Class of LENDING Product Line. This Property is

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TOT - Total Commitment Balance

CUR – Current Commitment Balance

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CHANGE.AMOUNT Field, in arrangement, is used to increase or decrease the

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Available amount is the committed amount less all disbursements.

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UPDATE.COMMT.LIMIT Field - attribute for lending products allows a user to specify

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Arrangement is pre-closed using the activity LENDING-CLOSE-ARRANGEMENT. If this is

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