This feature will allow MFIs to charge overdue loans only after the loan has matured based on the current outstanding balance.
Background and Business Need
Mifos currently only supports overdue installment charges. So daily repayments are penalised everyday if they are partly paid, and weekly repayments are penalised every week if they are partly paid and so on.
Overdue penalties are currently chargeable on every overdue installment BUT it should also support penalties charged only on OVERDUE LOANS (i.e loans that have past maturity), separately without penalising every overdue installment.
In the event that you have a fee frequency on your penalty then it should compound the charge on % BALANCE OUTSTANDING. Meaning on a fee frequency of 3 months for example - the 1st months charges the balance. The 2nd months charges the balance plus 1st penalty fees. Then the 3rd month charges the initial balance plus penalty for 1st month and penalty for 2nd month. (Charge Calculation = %Loan Amount + Interest + Penalties which is the same as %Outstanding Balance
Since these charges apply after the loan has matured it would be ideal to have a feature where we can tell it to stop charging penalties. Currently the penalties are applied inifinitely.
90% of MFIs in Africa and in Sri Lanka are using this penalty charge formula on paper but cannot implement it automatically on Mifos. The reason why it is so popular is because most MFIs provide daily and weekly loans to vendors and micro SMEs. So they cannot afford to charge their clients everytime they miss or partly pay an installment everyday in a loan period. As we strive to maintain our position as a financial inclusion technological platform.
Zimbabwe - 6 Microfinance organisations
Sri Lanka - 1 MFI
Kenya - 1 MFI
Tanzania - 1 Mifos Consultancy firm
TAAT Consutancy - Ed Tshuma
Skyburg Systems - Myself
We would like to have the project complete within 14 days
Work required involve adding charge time type to the penalty fees
Calculating charges on Total Outstanding Balance and not on missed installment.
Attached is a design of how we imagine the module will like after development.
Mailing list discussions - https://groups.google.com/d/msg/mifosdeveloper/fK-XfVVZXzs/PjGyXb7XAAAJ
We understand that Musoni have already got this feature developed.