Previous Next JavaScript must be enabled to correctly display this content

## 1.3.1 Create Interest Rule

This topic describes the systematic instructions to configure the interest rule maintenance details.

1. On Home screen, click Interest and Charges. Under Interest and Charges, click Interest Rule Maintenance.
2. Under Interest Rule Maintenance, click Create Interest Rule .
   The Create Interest Rule screen displays.

   Figure 1-3 Create Interest Rule Maintenance

   Description of "Figure 1-3 Create Interest Rule Maintenance"
3. Specify the fields on Create Interest Rule screen.

   Note:

   The fields marked as Required are mandatory.

   For more information on fields, refer to the field description table.

   Table 1-3 Create Interest Rule - Field Description

   Field | Description
   --- | ---
   Rule ID | Specify the unique code for each Rule ID to represent the type of interest. When the user wants to link a product to a rule, it is possible to identify the rule with the assigned code only.
   Rule Description | Specify the short description of the rule to indicate the type of interest. This will be used by the system for all the display and printing purposes. Enter atleast three characters for the Rule description.

User Element Window:

In the same way, the user picks up the SDEs applicable for the defined rule. The user should identify the UDEs which the user would be using in the rule. The types of UDEs are as follows:

- Rate
- Amount
- Number

The interest that you charge on a debit balance is an example of a debit rate. The interest that you pay on a credit balance is an example of a credit rate. A User Data Element will be an amount under the following circumstances:

- In the case of a tier structure, the upper and lower limit of a tier or a tier amount.
- In the case of a charge, when it is indicated as a flat amount.
- Any amount that can be used in the definition of formula.

A UDE as a number is typically used for a Rule where interest is defined based on the number of transactions. A UDE under this category can also be used to store a numerical value that may be used in a formula. For example, in the formula you would like to multiply an intermediate result with a certain number before arriving at the final result. The ‘certain number’ in the formula can be a UDE.

The user can enter the actual values of the UDEs (like the interest rate, the upper limit for the tier, etc.) in the IC User Data Element Maintenance screen. This is because you can specify 3-6 different values for each data element. A rule can, therefore, be applied on different accounts since it just represents a method of interest calculation. The following example illustrates this.

4. Click System Element Window to update the system element details.
   The System Element Window displays.

   Figure 1-4 Create Interest Rule - System Element Window

   Description of "Figure 1-4 Create Interest Rule - System Element Window"
   For more information on fields, refer to the field description table.

   Table 1-4 System Element Window - Field Description

   Field | Description
   --- | ---
   System Element Name | Click Search icon and select the system element name from the drop-down list. The user have to specify the method for calculating interest in the form of formulae.

5. Click Formula Window button to invoke the formula section.
   The Formula Parameters displays.

   Figure 1-5 Create Interest Rule - Formula Parameters

   Description of "Figure 1-5 Create Interest Rule - Formula Parameters"
6. Click Add Formula button.
   The Create Interest Rule - Add Formula - Formula Preferences screen displays.

   Figure 1-6 Create Interest Rule - Add Formula - Formula Preferences

   Description of "Figure 1-6 Create Interest Rule - Add Formula - Formula Preferences"

   Table 1-5 Create Interest Rule - Add Formula - Formula Preferences - Field Description

   Field | Description
   --- | ---
   Formula Number | Displays the formula number.
   Description | Specify the description of the formula.
   Formula Type | Select the formula type from the drop-down list. You have to specify the method for calculating interest in the form of formulae. The result of a formula will be an amount that has to be either debited from the customer account or credited to it. For example, the debit interest that the user charge on an overdraft would be debited from the customer account; while the credit interest that the user pay would be credited to the customer account. In this screen, you indicate this. Often, when calculating interest for an account, the user would want to debit interest under certain conditions and, under certain other conditions, credit interest. In such a case, the user can build formulae to suit both conditions. The formula that is used to calculate interest for the account would depend on the condition that is fulfilled.
   Book Flag | The Booking Flag of a formula denotes whether the result of a formula should be: Booked (that is, if the resulting amount should be posted to the customer account). Non-booked (that is, the result of the formula is to be used in another formula and not to be posted to the customer account). Tax (that is, the formula is used to calculate tax. The tax can be borne either by the customer or the bank).
   Days In A Month | The method in which the N of the formula for interest calculation, PNR/100, has to be picked up is specified for a formula. This is done through two fields: Days in a month Days in a year The number of interest days for an account can be arrived at in three ways. One, by considering: one by considering the actual number of days in a month two, the US method of considering 360 days in a year 3-8 three, the Euro method of considering 360 days in a year
   Days In A Year | The interest rate is always taken to be quoted per annum. You must therefore indicate the denominator value (the total number of days in the year) based on which interest has to be applied. You can specify the days in a year as Actual number of days (leap year will be 366, non-leap year will be 365) 360 days 365 days (leap and non-leap will be 365)
   Periodicity | The Periodicity of a rule application denotes whether the formula you are defining has to be: applied for each change during the interest period (or daily). only for the last day of interest period (periodic).
   Tax Pay Currency Flag | Select the currency in which tax is paid. It can be Account currency or Local currency.
   Currency Interest Method | Currency method is defaulted from currency definition screen.
   Accruals | Select the toggle to enable the interest accruals. Only if you indicate that interest should be accrued (for a formula) will it be done. You can opt to accrue the interest due to one formula and choose not to accrue the interest due to another formula that you are defining for the same rule. Note: Only a booking formula can have accruals.
   Rounding | Select the toggle to enable the interest rounding.
   Compounding | Select the toggle to enable the compounding.
   External Pricing | Select the toggle to enable the External Pricing.

Formula Window:

Using the SDEs and the UDEs specified for a Rule, the user can calculate interest. The user have to specify the method for calculating interest in the form of formulae. Using the SDEs and the UDEs, the user can create any number of formulae for a rule.

Expression Window

7. Click Expression Window button to invoke Add Expression table grid.
   The Expression Window displays.

   Figure 1-7 Create Interest Rule - Expression Window

   Description of "Figure 1-7 Create Interest Rule - Expression Window"
   For more information on fields, refer to the field description table.

   Table 1-6 Expression Window - Field Description

   Field | Description
   --- | ---
   Expression | Specify the expression.
   Condition | Specify the condition.
   Result | Specify the result.
   SDE Elements | This column displays SDE elements give in the system elements.
   UDE Elements | This column displays UDE elements give in the user elements.

8. Click Save to save the details.
   The user can view the configured interest rule maintenance using View Interest Rule screen.

Parent topic: Interest Rule