Loan Product Setup
You must use the Mbanq Admin Console to create a Loan product. When you create a new Loan product, you will be required to supply a number of attributes.
Key Features:
Our platform is designed to support NeoBanks and fintech companies in their go-to-market strategies by providing essential functionality and benefits. With our lending system, you can offer your customers a seamless and secure loan experience. Mbanq supports a wide variety of loan types including term loans, commercial loans, and collateralized loans. Loan products can be easily configured in the Mbanq Admin Console.
Setup and Parameters
Note: All red colored asterisk mark are mandatory fields.
Loan Product Details
Below are the main defining elements for the loan product.
| Parameter | Mandatory | Definition |
|---|---|---|
| Loan Product Name | x | This is the human-friendly name for the loan product |
| Loan Product Short Name | x | This is a short unique loan product name |
| Loan Product Description | A short description of the loan product, its purpose, etc. | |
| Loan Funding Source | x | The source account that is being used to fund the loans |
| Start Date | This is the date this loan product will be available | |
| Close Date | After this date, this loan product can no longer be offered, but existing loans will continue to be serviced | |
| Include in Client Loan Counter | Checkbox |
Loan Currency
All loans have to be originated in a specific currency. This section allows you to specify the loan's currency.
| Parameter | Mandatory | Example |
|---|---|---|
| Currency | x | US Dollar |
| Decimal places | 2 | |
| Currency in multiples of | 1 | |
| Installment in multiples of | x | 1 |
Terms
Loans typically are bound by specific terms and conditions which are specified in this section.
| Parameter | ||||
|---|---|---|---|---|
| Principal | Minimum loan amount | Default loan amount | Maximum loan amount | |
| Number of repayments (also known as Term) | Minimum repayments ex:24 | Default repayments ex:36 | Maximum repayments ex:60 | |
| Nominal interest rate | Minimum rate ex:18% | Default rate ex:28% | Maximum rate ex:40% | Time period ex: per year |
| Repaid every | Number ex: 1 | Time period ex: month | ||
| Is Linked to Floating Interest Rates? | Checkbox | |||
| Terms vary based on loan cycle | Checkbox | |||
| Minimum days between disbursal and first repayment date | ex: 30 |
Settings
| Parameter | Mandatory | Descriptions and Notes |
|---|---|---|
| Amortization | x | Equal installments or Equal principal payments |
| Interest method | x | Flat or Declining Balance |
| Is Equal Amortization | ||
| Interest calculation period | x | Daily - Will Calculate the interest on DAILY basis ex: Month of February has 28days and it will calculate interest for 28days, SAME AS REPAYMENT PERIOD- it calculates for the month, that is, 30days |
| Calculate interest for exact days in partial period | To be used with SAME AS REPAYMENT PERIOD- for calculating exact interest with partial period ex: Interest charged from is 5th of April , Principal is 10000 and interest is 1% per month then the interest will be (10000 1%) (25/30) , it calculates for the month first then calculates exact periods between start date and end date(can be a decimal) | |
| Repayment strategy | x | The order that payments are to be applied: - Penalties, fees, interest, principal - Principal, interest, fees, penalties - Interest, principal, penalties, fees - Overdue then Due, Fee then Interest, Principal - Early repayment |
| Moratorium | On principal payment or On interest payment | |
| Interest free period | ||
| Arrears tolerance | ||
| Days in year | x | Actual, 360, 364, 365 |
| Days in month | x | Actual, 30 |
| Number of days a loan may be overdue before moving into arrears | On Arrears Aging | |
| Maximum number of days a loan may be overdue before becoming a NPA (non performing asset) | Overdue Days For NPA | |
| Account moves out of NPA only after all arrears have been cleared? | x | |
| Allow fixing of the installment amount | ||
| Principal Threshold (%) for Last Installment | ||
| Is Variable Installments Allowed? | If yes, provide the minimum and maximum variance for the payments | |
| Is allowed to be used for providing Top up Loans? | ||
| Link with Fund Source Account | ||
| Ignore Undisbursed Tranches |
Other Settings
Besides the basic setting above, the Mbanq loan product can be further customized with the following parameters.
Interest Recalculation
Check the "Recalculate Interest" checkbox to enable Interest recalculation.
| Parameter | Mandatory | Notes |
|---|---|---|
| Pre-closure interest calculation rule | x | |
| Advance payments adjustment type | x | |
| Interest recalculation compounding on | x | |
| Frequency for compounding | x | Can be daily, weekly, monthly |
| Frequency Interval for compounding | x | Typically 1 |
| Frequency for recalculate Outstanding Principal | Can be daily, weekly, monthly | |
| Frequency Interval for recalculation | ||
| Is Arrears recognization based on original schedule |
Guarantee Requirements
You can determine if Guarantee Funds are On-Hold by checking the box, and then inputting the following:
- Mandatory Guarantee: (%) This is to provide total % of loan amount as mandatory guarantee. Example: 20 %.
- Minimum Guarantee from Own Funds: (%) Example: 10 % of loan amount from Own funds.
- Minimum Guarantee from Guarantor Funds: (%) Example: 10 % of loan amount from Guarantor Funds.
Loan Tranche Details
You can control how tranches are disbursed for the loan by checking the box.
- Provide the maximum number of disbursements allowed for a loan account.
- Provide maximum outstanding loan account balance at a point in time.
Configurable Terms and Settings
By default "Allow overriding select terms and settings in loan accounts" is checked (Enabled). If you don't want to allow over ridding for the mentioned categories, then you could un-check the box. You can allow certain parameters to be configured after the fact including:
- Amortization
- Interest method
- Repayment strategy
- Interest calculation period
- Arrears tolerance
- Repaid every
- Moratorium
- Number of days a loan may be overdue before moving into arrears
Charges and Overdue Charges
You can create and define charges and charges when the loan is overdue. Just click on add to create a new charge.
Accounting
You can specify if there is an accounting treatment, and if so, if it is cash or accrual based.
Updated 10 months ago