repayment of written off contracts

7/21/2019 Repayment of Written Off Contracts

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Repayment of written off contractsManual repayment of contracts with FWOF status is done by choosing the ‘Repayment’ optionin the field OPERATION in the PD contract. When the repayment amount is entered in

TOT.REPAY.AMT, it is apportioned in the order mentioned in the FWOF.RPY.ORDERmultivalue field given in the PD.PARAMETERrecord that appears in thePARAMETER.RECORD field in the PD contract. In the case of PDLD0726300002 thePD.PARAMETER record shows the order as follows:

PD Parameter Record

An amount of 1,000,000 is repaid on the contract PDLD0726300002. This has been apportionedfirst towards the interest component (IN) of 6,416.66 and then principal component (PR) of993,583.34. The screenshot of the repayment is shown below:



Repayment



Set the Provision Method field to MANUAL

In the above PD contract, the ASSET.CLASS has been changed to 3 (Doubtful). ThePROVISION has also been changed to 90%. The PROVISION.AMOUNT has been changedonline to 73,516.68 from 24,505.56 earlier. The WOF.REASO N has been given as ‘3’ which inthe PD.WOF.REASONStablehas been defined as ‘Industry in Negative List’

The statement entries and P& L entries are shown below. As the class of the asset has changed,the earlier entries that were passed for the previous class need to be reversed. The statemententries show that for PDMG0726300001 the previous credit to USD-11061-0001 (the internalaccount for substandard assets) has been debited with 24,505.56 and USD-11062-0001 (internalaccount for doubtful assets) has been credited with 24,505.56. Similarly, the P&L category forsubstandard assets (51051) has been credited with 24,505.56, and the P&L category for doubtfulassets (51052) has been debited with 24,505.56. Thereafter, provision has been created for theincremental amount of 49011.12 (73516.68 – 24505.56) by debiting category 51052 andcrediting internal account USD-11062-0001.

After the asset class has been changed, in the PD, the asset class can be changed to the same inthe underlying MG contract. If it is not done online by the user, it will be done during COB bythe system. In this particular case, the asset class in MG0726300001 has been changed toDoubtful and provision has been made at 90% of the underlying MG amount of 918314.8.#



Changes asset class in MG contract

Balances files

LN.PROV.BALANCESis a table maintained by the system which contract-wise provisioning for

every customer. The following screenshots show the table on September 21st

and September 24th

for the customer David Brown Limited.

LN.PROV.BALANCES as on September 21 st:



LN.PROV.BALANCES.DETAILSis a table maintained by the system that shows the movementof an asset from one asset class to another. The screenshot below shows the status of

LD0726300002 for which a provision of 270,000 was made on September 20 th, when the assetwas classified as Substandard. On September 21 st, the asset became Doubtful as a result of which

75% of the outstanding principal balance of 800,000 had to be provided for. Hence, an extraamount of 330,000 has been provided, bringing the total to 600,000.



LN.PROV.BALANCES DETAILS table

(c) Temenos Systems 2013

repayment of written off contracts

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