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Penalties on arrears

This window allows automatic calculation of penalties on loans in arrears for several loans. This feature calculates arrears on all outstanding loans which are subsequently displayed in the scroll window below.

Note that before you can be able to charge penalties on loans in arrears

1. LPF should have been configured to levy charge and penalties on loans under System Configuration/Loan Product Settings/Penalties Settings.

2. Also note that penalties can be configured to be charged automatically under System Configuration/Loan Product Settings/Penalties Settings when you select the option "Automatically calculate penalties” or “Automatically calculate penalties at logon”. This window allows automatic calculation of penalties on loans in arrears for several loans.

3. Also note that for the loan charges to appear in the Report on fees received, ensure that they have been configured under Support files/show more/charge items.

4. You can be able to enter loan charges and penalties under Loans/Penalties or Charge on a single loan and Loans/Penalties on arrears.

5. You can be able to view the report on charges under Portfolio Reports/Reports on Repayments/Report on Fees Received when you select the option "Loan charges".

How to calculate penalties on loans in arrears

To calculate penalties on loans in arrears, go to Loans\Penalties on arrears, a screen like one below will appear:

• Note that the decision on Penalty calculation mode, i.e percentage or flat amount, the number of grace days and period for loans in arrears to be charged after expiry is a matter of policy and set under System Configuration/Loan Product Settings/Penalties Settings.
  

• Loan product: Select the loan product for which to calculate arrears from the Loan Product drop-down list menu.
• Penalty calculated as a simple percentage of 5 percent on principal and Interest in arrears with a minimum of 100 Ugx: This is the basis of penalty calculation selected under System Configuration/Loan Product Settings/Penalties Settings.
• Client has 14 days grace period: At the expiry of the loan, penalties will not be charged until after 14 days.
• Loans in arrears of more than 2 months after the expiry date, won't get penalty: At the expiry of the loan, penalties will be charged for only two more months after that no penalties will be charged.
• Penalties should be calculated for loans in arrears as at: Enter here a date that upto when the penalties are to be calculated. When you tick this option, LPF will display the penalties up till this particular date, e.g. "19/08/2019".

• Disregard the period before: Enter here a date that LPF will start computing the penalties the period before this date is not included like 31/08/2019 indicated above.
• Entry date of penalties: This will be the date the penalties will be charged or reflected e.g "30/08/2019" This date has to be the same as the date at "Penalties should be calculated for loans in arrears as at" or before.

• Calculate penalties on capitalized interest and penalties in arrears: When this option is selected then the system will include the interest that has been compounded/added to principal in the computation of penalties.
• Calculate penalty if the days in arrears are past the grace period: When this option is selected then the system will calculate penalties only when the grace period has elapsed.
• Include loans with dues on reporting date: When this option is ticked, then the system will include in the computation of penalties those loans that are due to be paid on that date i.e entry date of the penalties for in instance "15/10/2018" but have not yet been paid.
• Exclude expired loans: Selecting this option will include the loans whose loan term has passed.

• Select all: Select this option and all loans in the grid will be highlighted. From the displayed scroll window (Grid) you can activate the charge penalty check box against the loans you want to penalize.

The parameters used for the arrears calculations are those as configured under System Configuration/Loan Product Settings/Penalties Settings for every product.

Related Topics

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