Fineract1.x - how interest capitalization works

[Rama Reddy <re...@yahoo.com.INVALID>]

Hi,I would like to understand how the interest capitalisation functionality has been built in fineract1.x. Below is the scenario
I had cash instalment loan product defined with monthly repayment    - interest calculation as daily    - Accrual (Periodic).  in Accounting section
 I could see interest accruals happening and accrual transactions are posted daily to Interest receivable (Asset)  & Income from Interest (Income). 
EoM , I would expect all these accrued interest to be capitalised(interest accrued over last cycle)  and posted into Loan Portfolio (Asset) GL account .
At the moment I did not see this is happening in fineract, please advise am I missing some thing to setup right configuration to get capitalised interest to be posted ?  Does fineract1.x supports this feature ? if yes ,please advice the steps , do I need to define new accounting rule ? How and what are the jobs to be executed at EoM?

Thanks in advance,Ram Reddy

Re: Fineract1.x - how interest capitalization works

[Saransh Sharma <sa...@muellners.com>]

First thing you can setup accounting and define financial activities.


You can setup accounting rules it supports debit rule and credit rules for
both unpaid interest.

Apart from that check out more information

Before that answering your question.. Currently fineract support multiple
strategies for Interest recalculation as well as adjustment

Did you try?

It has advance payment adjustments   frequency.

I am really sure it can be achieved with minimal effort.

Although I quickly checked that if there was addition of unpaid interest
over remaining principal.

As far as I remember it does work let me know if you need more information.

Thanks


On Sat, 1 Feb 2020, 14:38 Rama Reddy, <re...@yahoo.com.invalid> wrote:

> Hi,
> I would like to understand how the interest capitalisation functionality
> has been built in fineract1.x. Below is the scenario
>
> I had cash instalment loan product defined with monthly repayment
>     - interest calculation as daily
>     - Accrual (Periodic).  in Accounting section
>
>  I could see interest accruals happening and accrual transactions are
> posted daily to Interest receivable (Asset)  & Income from Interest
> (Income).
>
> EoM , I would expect all these accrued interest to be capitalised(interest
> accrued over last cycle)  and posted into Loan Portfolio (Asset) GL account
> .
>
> At the moment I did not see this is happening in fineract, please advise
> am I missing some thing to setup right configuration to get capitalised
> interest to be posted ?
> Does fineract1.x supports this feature ? if yes ,please advice the steps ,
> do I need to define new accounting rule ? How and what are the jobs to be
> executed at EoM?
>
>
> Thanks in advance,
> Ram Reddy
>
>