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Table of Contents (Online Help)

Time Deposits Settings

This window allows you to set parameters for the different time deposit products. These products should have been created under System/Configuration/Products.

Note:
1. After you have defined the settings, you will be able to see all the time deposit transactions that occurred on the client's account under the menu Clients/Individual clients/Time Deposit (Ind. Clients).

Defining time deposit settings

To do this, you go to System/Configuration/Time deposits/Time deposits settings, the following screen appears:

• Currency : Select from the drop-down menu to select the product currency e.g "UGX". The default currency should have been defined under Support files/Currencies.
• Minimum Deposit Amount: In this text-box, indicate the lower limit for the time deposit product. At data-entry, under the menu Savings/Time Deposits/Open Time Deposits, you will not be able to enter an amount that is below the one defined here for that product e.g."50,000" (See the image below).

• Maximum deposit amount: In this text-box, indicate the upper limit for the time deposit product. At data-entry, under the menu Savings/Time Deposits/Open Time Deposits, you will not be able to enter an amount that is above the one defined here for that product e.g."10,000,000".
• Minimum Interest rate (%): Enter here the lower limit for the annual interest rate of the product. At data-entry you will not be able to enter an interest rate that is lower than the one defined here for that product e.g. "24%". Interest on time deposits is calculated under the menu Savings/Time Deposits/Interest on Time Deposits.
• Maximum Interest rate (%): Enter here the upper limit for the annual interest rate of the product. At data-entry you will not be able to enter an interest rate that is higher than the one defined here for that product e.g. "60%" Interest on time deposits is calculated under the menu Savings/Time Deposits/Interest on Time Deposits.
• Minimum time deposit period: Enter here the lower limit for the time deposit period (in months). At data-entry, under the menu Savings/Time Deposits/Open Time Deposits, you will not be able to enter a period that is below the one defined here for that product e.g "4".

• Maximum time deposit period: Enter here the upper limit for the time deposit period (in months). At data-entry, under the menu Savings/Time Deposits/Open Time Deposits, you will not be able to enter a period that is above the one defined here for that product e.g "999".

Note: Unless the limits mentioned above i.e the maximum and minimum values have been defined, the corresponding fields will be inactive under the menu Savings/Time Deposits/Open Time Deposits.

• Penalty for premature withdrawal (percentage): Here you enter a penalty in percentage that will be levied on the interest gained on a time deposit in case it is withdrawn before the agreed period e.g "5%".

For example, take a time deposit of 1,000,000 UGX at an annual interest rate of 25% for a period of 4 months. The interest to earn at the end of the period would be calculated as follows:

(Principle X Annual rate X Period in months) / Number of months in a year

= (I,000,000 X 25% X 4) / 12 = 83,333.333

If a penalty of 5% is levied on the interest earned in case of a premature withdrawal and the above time deposit is withdrawn after 3 months, the calculation of the interest earned will be as follows:

Interest earned after 3 months = (Principle X Annual rate X Period in months) / Number of months in a year less the penalty of 5% levied on the interest earned

= (I,000,000 X 25% X 3) / 12 - Penalty of 5% levied on the interest earned

= 62,500 - (62,500*5%)

= 62,500 - 3,125

= 59,375

Therefore, the client will withdraw 1,059,375 from his time deposit account.

• Penalty for pre-mature ending (flat amount): Here you enter an amount that will be deducted from the time deposit interest so far earned when it is withdrawn pre-maturely e.g. "4,000".

The actual amount withdrawn above is

1,000,000 + 62,500 = 1,062,500 - 4,000 = 1,058,500

Note that you must choose only one of the two options of penalty calculation and when you choose one the other becomes inactive.

• Depends on period elapsed: If this check box is not ticked, the penalty rate will be levied on the interest amount at the end of the period in months or days. If it is activated the penalty rate will be levied on the interest accumulated depending on the period that has elapsed in case of a premature withdrawal. If this check box is not ticked, the interest rate will be applied to the time deposit amount at the end of the period in months or days. If it is activated the interest rate will applied to the amount depending on the period that has elapsed in case of a premature withdrawal.+

Note:

1. Interest and penalties are normally calculated in months. However, if you want LPF to calculate interest and penalties in days, then tick the two options "Interest period specified in days" and "Interest calculation in days".

2. If the option "Interest period in days" is ticked, then you will be required to enter the number of days under the menu Savings/Time Deposits/Open Time Deposits and not the number of months. The label will change from "Period in months" to "Period in days".

3. If the option "Interest calculation in days" is ticked whereas the other option "Interest period specified in days" isn't, then you will be required to enter the number of months but LPF will automatically consider the number of days in a month to calculate interest and penalties on time deposits. In this case you will see the label "Period in months" under the menu Savings/Time Deposits/Open Time Deposits and not "Period in days". If you tick both options, then interest will be calculated in days and you have to enter the number of days.

4. If you want LPF to calculate penalties and interest on time deposits in months, then leave the other two options"Interest period specified in days" and "Interest calculation in days" unticked.

5. Note that if the period is in months and the time deposit is withdrawn prematurely after 3 months and 15 days,in this case LPF will ignore the 15 days and only consider the 3 complete months that have elapsed. In this case the option "Depends on months elapsed" should have been ticked.

• No interest if premature withdrawal: When this option is activated, no interest will be paid on time deposit withdrawn prematurely.
• Withholding Tax (%): Here you enter the percentage that will be imposed on the interest earned as withholding tax e.g. "5". Remember to specify the GL account on which the withholding tax will be booked on the next tab System Configuration/Time Deposit Configuration/Time Deposits GL Accounts. The amount deducted will also appear on the client's time deposit statement under the menu Savings/Time Deposits/Time deposit statement and on the report on interest paid on time deposits under the menu Savings/Time Deposits/Interest paid on time deposit report.

Note:

1. When a time deposit matures, LPF allows you to transfer it to the client's savings account. You have to select the option "Transfer to savings" when withdrawing the time deposit under the menu Savings/Time Deposits/Withdrawal Time Deposit. The client will be see the transfer on his savings account statement under the menu Savings\Savings Report\Savers Statements.

2. Loan Performer also allows you to transfer several mature deposits at the same time under the menu Savings/Time Deposits/Transfer All Matured Time Deposits.

• Number of interest days in a year: Here you enter the number of interest days in a year that Loan Performer will use when calculating the interest payable on time deposits if the check box Interest Calculation in days is ticked. That number can be "365 or 366"
• Interest period specified in days: If this is ticked, then you will be required to enter the number of days under the menu Savings/Time Deposits/Open Time Deposits and not the number of months. The label will change from "Period in months" to "Period in days".
• Interest calculation in days: If this option is ticked whereas the other option "Interest period specified in days" isn't, then you will be required to enter the number of months but LPF will automatically consider the number of days in a month to calculate interest and penalties on time deposits. In this case you will see the label "Period in months" under the menu Savings/Time Deposits/Open Time Deposits and not "Period in days". If you tick both options, then interest will be calculated in days and you have enter the number of days.

Note that Loan Performer supports five different interest calculation methods on time deposits, for more information go to Savings/Time Deposits/Open Time Deposits.

Click on the Save command button to save the settings and on the Close command button to quit.

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