Introduction to Lending

The Lending module comprises of the lending related functionalities pertaining to Norway. This module covers the following functionalities.

Adjust the Interest Rate When a Loan is Changed before Maturity

There is a concept of Fixed Rate Agreement in the Norway region when consumers approach the bank for a particular loan facility. This facility can be for a particular period. From the start date of the loan until the maturity date of the loan, there is a certain period timeframe in the loan, which is agreed between the bank and the consumer as a Fixed Rate Agreement period. The actions like modifying the customer details, modifying the interest rate, pre-pay the loan and pre-close the loan can lead to the breach of the agreement and requires the calculation of premiums or discounts. If the customer is asking for one of these actions, then the bank is allowed to levy a premium to the customer, which must be serviced by the customer before the loan amendment is made effective.

The interest of the loan may increase in a point in time, and the bank is gaining more income than the expected one and therefore, the additional interest which the bank is gaining from the customer will be treated as a discount and will automatically be applied to the loan to reduce the principal balance of the loan.

This functionality allows banks to offer a dynamic Fixed Rate Agreement which can be either 3 years, 5 years, 7 years or 10 years. The bank can extend the Fixed Rate Agreement period as desired. Banks can calculate the premium or the discount when the fixed rate agreement is breached and the premium or the discount calculation specification are available for reporting with the respective details. Also, banks can send out messages to the customer using the Temenos Transact delivery framework in a printable or readable format. When the calculated charges of the premium or discount are linked, the calculation specification will be generated as a notice for charge details in printable format.

The Norway Consumer Lending product is added to the Norway Lending product group to allow the bank to create loans, perform the required changes, achieve the levying of the premium or the discount for the customer during the loan modification like changing of the customer details, changing of the interest rate, loan prepayment and loan pre-closure (payoff).

The system doesn’t allow the user to enter into a fixed rate agreement if the customer has breached a Fixed Rate Agreement in the last 6 months.

The following items are introduced as part of this functionality:

• The NOLEND.PARAMETER application allows the bank to configure the agreement change period, the interest property for the NOLEND product group.
• The NOLEND.CASHFLOW.DETAILS application allows the bank to store the charge details of the loan arrangement created as a Fixed Rate Agreement.
• The AA.ARRANGEMENT.ACTIVITY,NOLEND.ACTIVITY version allows the bank to capture the premium or discount that is applicable for the lending arrangement.
• New Periodic Attribute Property Class records are used and linked to the ACTIVITY.RESTRICTION property class to check if the customer has repaid all dues on premium and if the customer has breached any Fixed Rate Agreement in the past 6 months.
• New Product Conditions record for the ACTIVITY.MESSAGING property class is used to send out the messages to the customer.