Description: As a bank/loan provider in Australia, I want to collect interest on fee charged to my credit card using customer, that is why I need to be able to calculate and charge interest on the fees applied to a Revolving Credit account.
Problem statement - Currently, for revolving credit product it is not possible to calculate interest base on (Principal Balance + Interest Balance + fee Balance ), it is only possible to calculate and charge interest on (principal) or (principal + interest). Not calculating interest on the fee balance impacts the interest income and that quoting a higher interest rate for the loss of interest income is not a good idea as it makes the product less competitive in the market.
Type of feature:
Improvement: Add Simple Interest type calculated based on (Principal Balance + Interest Balance + Fee Balance) for revolving credit product.
Dev-less solution provided: yes
In the interim, we have suggest the following dev-less solution:
Create a Transaction Channel(s) that links to the relevant Fee Income GL accounts.
Capitalise a fee by making a disbursement on the account via the Fee Transaction Channel(s).
That way the fee will be added to the Principal Balance and interest will be calculated on. There is no Fee Balance position.
Mambu would post the following JEs:
DR Loan Portfolio
CR Fee Income
If you used Mambu's native fee feature, Mambu would post the following JEs:
DR Fee Receivable
CR Fee Income
The Fee Receivable position would be resolved when a repayment comes in and is allocated in accordance with the Repayment Allocation Order defined on the product. However, this would be not applicable if the intermediate solution is used. For example:
DR Bank Transfer
CR Fee Receivable
Dev-less solution accepted : No
Customer is still reviewing/testing the solution provided as the JE generated from the Dev-less solution is not an exact replica to the customer's expectation.