Details
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New Feature
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Status: Resolved
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Major
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Resolution: Fixed
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None
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None
Description
As a user with 'NEW'“ permission
I want to add a charge-back transaction on the loan account
in order to post the debit to the loan account (increase the loan balance of the account)
User Cases/Background and details:
When an old transaction needs to be reversed, currently the system reverses all the latest repayments first in order to reverse the old transaction
this might result in interest, and principal recalculation, and affect the accounting ledger closing entries.
If we introduce the new transaction named chargeback it will increase the loan balance and the amount would be collected in the upcoming repayments
This approach is also helpful in covering the refund scenarios for organizations that refund back the amount for the customers who were excess collected or disputes raised.
We can have two types and can be managed at the payment_type level
• REPAYMENT_ADJUSTMENT_CHARGEBACK
• REPAYMENT_ADJUSTMENT_REFUND
Acceptance criteria
- Functionally both types behave the same with respect to loan treatment, hence a single transaction type with different 'payment types' will work to meet 2 use-cases.
- Chargeback Transactions should have linkage to the original transaction which was raised as a dispute transaction
- A chargeback transaction will increase the current loan balance and adds to the next installment and collects back by the next repayment.
- A Chargeback Transaction when posted a bill will be due to be collected as on the current date
- The overdue calculation, Delinquency calculation will begin from the chargeback addition date
- When there are 2 chargebacks the Delinquency calculation will happen from the last not fully paid chargeback date.
- Chargeback transactions should have the ability to post full or partial amounts as per the user’s request
- A Chargeback Transaction can be posted in multiple types on the same loan account
- A chargeback transaction can be posted on the closed loan account. when posted on the closed loan account, the loan should be reopened with the principal balance to pay
- Extra installments created after maturity should have a flag that it’s not a real installment.
Validations for now - A Chargeback Transaction should be allowed only for zero interest bearing loan accounts and
- No Changes on Penalities calculations for post-maturity chargeback installments
- Chargeback transactions once posted cannot be reversed
The attached excel document will explain the different use cases of schedule behavior based on charge-back transactions
And the following will be the accounting treatment for the chargeback transaction(for both cash-based and accrual cases)
Journal entries to be passed for chargeback transaction
| Entry Type | Accounting Type in Loan Product | GL-Code | GL-Name in Loan Product | Type of CoA | The logic for calculating the Amount for passing the entries |
|---|---|---|---|---|---|
| Debit | Loan portfolio(Asset section) | 112601 | Loans Receivable | Asset | Sum of Principal components of the chargeback transaction |
| Credit | Fund source(Asset section) | 145023 | Suspense/Clearing account | Liability | Sum of Principal components of the chargeback transaction |