Tips to Configure: Products

Product Overview

product_id

Your internal product ID. Configure default templates for frequently used products. All of the values can be overwritten when creating a specific account, but the overarching structure can not.

You can configure as many products as is convenient to you

Example:

• You create a template (product) for a one time loan that has a 12 month tenure, charges an interest rate of 10%, has a processing fee of INR 500, and is paid back in monthly instalments

• When creating a specific loan account you can overwrite the interest rate, the length of the tenure, and the value of the processing fee

• you can not overwrite the overarching structure - the fact that it is a one time loan

product_type

RootFi OS currently supports 2 major types of lending products:

1. Term Loan

2. Line of Credit

product_category

Product category refers to fields like SME Lending, Purchase Financing, etc.

short_description

A basic description of the product.

An Example - "Standard 12 month line of credit"

long_description

Optional. Add more details about the product (as many or few as you choose)

An Example:

• Standard 12 month line of credit

• 10% Interest rate

• Flat Interest type

• INR 500 Processing fee, etc.

Payment Due Policies

days_to_delinquent

The number of days past due (DPD) before triggering a status change to the loan account

An Example (days_to_delinquent =30)

1. A borrower was meant to pay an EMI of INR 10,000 on the 5th of the month.

2. It is already 5 days past his EMI due date (5 DPD) and he still has not paid

3. After 30 days the borrowers loan account status is changed to delinquent.

days_to_npa

The number of days past due (DPD) before triggering a status change to the loan account

When an account is marked as a Non Performing Asset (NPA), the borrower has essentially defaulted. This will result in your profit and reserve balance being reduced. (Is this correct?)

Fee Policies

late_fee_grace_period

Sometimes you don't want your borrower to face an immediate penalty, so you give them a grace period. Automatic account status changes or any late fees will not be triggered until the end of the grace period. This way you can still let the borrower know when their payment is contractually due, but offer them some under-the-hood leeway on being late for payments, reducing your servicing burden.

late_fee_grace_period_type

You have the ability to decide whether or not to charge the customer interest during the grace period.

late_fee

The value of the late fee that you will charge the borrower once the grace period has ended.

late_fee_type

You can choose between FLAT and PERCENT

late_fee_frequency

The frequency with which late fees are generated (Daily, Weekly, Monthly)

late_fee_calculation_method

This field is only required if the late_fee_type is set as PERCENT

Is the late fee calculated as a percent of the principal + interest, or just a percent of the principal.

late_fee_cap

The max amount of late fees that can be charged for this product.

Example:

• If late_fee is set as 10

• The late_fee_frequency is set as daily

• And the late_fee_cap is set as 100

• Then late fees will be generated for 10 consecutive periods (days) before reaching the limit of INR 100.

Billing Cycle Policies

cycle_interval

This lays out the interval of the billing cycle for borrowers. Currently we support monthly and weekly cycles. But we are working hard to add atypical billing cycle lengths based on your use case.

first_emi_date

The date on which the first instalment has to be repaid by the customer. All following EMI due dates are calculated by adding the cycle_interval to the first_emi_date

Example:

• If the cycle_interval is monthly

• And the first_emi_date is the 5th of march

• then the next EMI due date will automatically be the 5th of April.

tenure

The value for the tenure of the loan is always the number of months.

For a weekly cycle we consider 4 weeks per month. So if you wanted to create a loan with 12 weekly instalments, the value you must enter for loan_tenure is 3

days_in_a_year

The number of days to be considered in a year:

1. 360

2. 365

tax_calculation

You may or may not be required to charge GST, depending on whether the licensed partner being used is a bank or NBFC. (Banks do not require you to charge any GST)

tax_percent

The value for the rate of of tax that is to be charged for this product

If you would like to set the rate of interest as 18%, simply input the value 18 in this field

Interest Policies

interest_rate

The value for the rate of interest you will be charging the borrower for this product. This value can be overwritten when creating a specific loan account later on.

If you would like to set the rate of interest as 12%, simply input the value 12 in this field

interest_type

The method used for calculating the rate of interest for this product (either flat or reducing) If you would like to set the type of interest as flat, simply input FLAT in this field

Important note: Currently the REDUCING Interest type is only supported for MONTHLY cycle intervals. If it is used for WEEKLY cycle interval then the system calculates the interest using the reducing balance method for a monthly cycle, and splits this amount by 4.

interest_calculation_frequency

How frequently is the interest compounding for this product (daily, weekly, monthly, none)

interest_balance_calculation_method

How is interest being calculated

1. On the principal amount only

2. on the principal + interest

3. on the principal + interest + fees

Credit Line Policies (only valid for credit line type)

days_to_due

This field controls when the customers statement is generated each period.

How many days before the payment due date would you like the statement to be generated (this will also signify the end date of the cycle.

Example:

• If the cycle_interval is monthly

• The first_emi_date is the 5th of the month

• And you input 4 as the days_to_due

• Then the bill will be generated on the 1st of the month, and payment is due on the 5th.

minimum_payment_percentage

This field decides what percentage of the outstanding balance has to be repaid on the due date to avoid incurring any fees.

If the customer has to pay the full instalment amount in order to avoid incurring fees then simply input the value as 100 - indicating 100% of the outstanding amount is due

This field is set as a default at the Product level and can be overwritten when creating a specific Account.

minimum_payment_type

This field describes whether the minimum payment is calculated as a percent of jus the principal, or a percent of the principal + interest.