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Repayment of written off contracts

Manual repayment of contracts with FWOF status is done by choosing the Repayment option
in 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.ORDER
multivalue field given in the PD.PARAMETERrecord that appears in the
PARAMETER.RECORD field in the PD contract. In the case of PDLD0726300002 the
PD.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 apportioned
first towards the interest component (IN) of 6,416.66 and then principal component (PR) of
993,583.34. The screenshot of the repayment is shown below:


Reasons for write off

The user may want to record the reasons for writing off a loan when he does it manually. For this
purpose, he can define reasons in a table called PD.WOF.REASONS. The reason can be
mentioned in the PD record at the time of manually maintaining the asset class to write-off

Manual maintenance of asset class

Apart from the change of asset classification that happens during COB, the user is given the
option to change the asset classification online at contract level. The fields ASSET.CLASS,
PROVISION and PROVISION.METHOD are inputtable fields, both at PD and LD/MG contract
level. For contracts which have a past due component, the change will have to be done first in the
PD contract, and then in the underlying LD/MG contract.
For example, on September 21st MG0726300001 was a substandard asset with a PD component.
It may be decided to downgrade this asset manually to Doubtful status. In this case, if the manual
downgrade is first attempted in the MG contract, the following error message will be displayed.

Downgrade error message

The above error message shows that as the PDMG0726300001 still has an asset class of
Substandard, the asset class in the MG cannot be changed to Doubtful. Therefore, the asset class
has to be changed first in the PDMG contract. This is done by choosing Maintenance in the
field OPERATION. Thereafter, the field PROVISION.METHOD has to be set to MANUAL.
Now the user can effect the desired change:

Set the Provision Method field to MANUAL

In the above PD contract, the ASSET.CLASS has been changed to 3 (Doubtful). The
PROVISION has also been changed to 90%. The PROVISION.AMOUNT has been changed
online to 73,516.68 from 24,505.56 earlier. The WOF.REASON has been given as 3 which in
the 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 statement
entries show that for PDMG0726300001 the previous credit to USD-11061-0001 (the internal
account for substandard assets) has been debited with 24,505.56 and USD-11062-0001 (internal
account for doubtful assets) has been credited with 24,505.56. Similarly, the P&L category for
substandard assets (51051) has been credited with 24,505.56, and the P&L category for doubtful
assets (51052) has been debited with 24,505.56. Thereafter, provision has been created for the
incremental amount of 49011.12 (73516.68 24505.56) by debiting category 51052 and
crediting internal account USD-11062-0001.

After the asset class has been changed, in the PD, the asset class can be changed to the same in
the underlying MG contract. If it is not done online by the user, it will be done during COB by
the system. In this particular case, the asset class in MG0726300001 has been changed to
Doubtful 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 21st:

LN.PROV.BALANCES as on September 24th

LN.PROV.BALANCES.DETAILSis a table maintained by the system that shows the movement

of 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 20th, when the asset
was classified as Substandard. On September 21st, 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 extra
amount of 330,000 has been provided, bringing the total to 600,000.


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