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  1. Apache Fineract
  2. FINERACT-636

Penalty Charged On Overdue Matured Loan



    • Type: Improvement
    • Status: Open
    • Priority: Major
    • Resolution: Unresolved
    • Affects Version/s: None
    • Fix Version/s: None
    • Component/s: Loan
    • Labels:


      Project Overview


      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.

      Project Supporters(s)

      Zimbabwe - 6 Microfinance organisations
      Sri Lanka - 1 MFI
      Kenya - 1 MFI
      Tanzania - 1 Mifos Consultancy firm
      TAAT Consutancy - Ed Tshuma
      Skyburg Systems - Myself

      Project Details

      Assigned contributors

      Ed Tshuma

      Venon Mapfunde

      Project Status

      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.

      Additional Information

      Mailing list discussions - https://groups.google.com/d/msg/mifosdeveloper/fK-XfVVZXzs/PjGyXb7XAAAJ
      We understand that Musoni have already got this feature developed.




            • Assignee:
              santoshmath Santosh Math
            • Votes:
              4 Vote for this issue
              7 Start watching this issue


              • Created: