Annuity Module

Module Functions
The Annuity Module is providing for servicing of the following products (in respect of the back office processing of operations):

1. Consumer credits;
2. Mortgage credits;
3. Classical autocredits;
4. Autocredits with suspended last payment.

The technological scheme employed to maintain annuity credits is composed of the following stages:

1. Maintenance of products
2. Agreement registration
3. Transfer of funds under the agreement to a legal entity;
4. Maintenance of agreements;
5. Agreement terminating and debt derecognition;
6. Automatic servicing of agreements

Maintenance of products
To maintain products a functionality is implemented making it possible to specify:

1. Parameters of accounts used when servicing agreements:
2. Bank’s tariffs:
   Interest rates:
   • In respect of current debts;
   • In respect of overdue debts.
   
   Commission fees and penalties:
   • For a loan availability;
   • For partial or complete prepayment;
   • For a failure to effect scheduled prepayment;
   • For overdue debt emersion
3. product servicing parameters:
   • application of the Bank’s new tariffs in addition to the existing ones when they are amended, or employment of tariffs which were fixed when an agreement was registered
   • minimum and maximum amount and term of a product;
   • Setting parameters for a possibility of automatic authorization;
   • Parameters to compute monthly commission fees for agreement servicing;
   • Parameters to compute monthly and lump-sum insurance payments;
   • Parameters of client accounts which may be used as auxiliary accounts for debt repaying;
   • Parameters for computing a grace period in respect of paying penalties for overdue debts;
   • Moratorium on prepayment and debt recomputation mechanism in case of a partial prepayment;
   • A possibility to input payment orders to remit funds under the agreement to a legal entity;
   • A possibility to extend an additional loan to repay current debts.

Agreement registration
The Module is providing for the following functionality to register agreements (both interactive and automatic ones on the base of data coming from external systems):

1. preliminary registration of agreement repayment schedules ;
2. agreement type. If during input of an agreement is terms and conditions set in the product are met automatic authorization of such agreement is effected;
3. agreement authorization. As a result of the agreement authorization funds are credited to the client’s account and, if required, the commission fees for the loan availability are debited.

Transfer of funds under the agreement to a legal entity
The Module is providing for the following functionality to transfer funds under the agreement to a legal entity:

1. relocation and maintenance of payment parameters of such legal entity;
2. input of payment instructions to transfer funds under the agreement. Such payment instructions are input both interactively and automatically on the base of data coming from external systems. Such payment instructions are also providing for debiting various commission fees — both from the client’s account and from that of a legal entity for remitting funds;
3. centralized remitting of funds to a legal entity paid to the latter within the past business day. The Settlement System Module’s functionality is used to remit funds.

Agreement Maintenance
The Module is providing for the following functionality for agreement maintenance:

1. updating agreement parameters;
2. setting agreement values from a preset date;
3. registration of clients’ requests to effect debt prepayment;
4. maintaining exposure groups under the agreement in the manual mode in the event that such agreement should not be included in reserves in the group of tied-up borrowers;
5. agreement removal;
6. agreement securitization:
   • maintaining transaction and portfolio parameters;
   • assignment of rights of claim under the agreement;
   • maintaining the assigned agreement;
   • generating the required reports on such assigned agreements.
7. agreement data scanning:
   • agreement debt scanning;
   • scanning of agreement servicing accounts;
   • repayment schedule scanning.

Within the framework of agreement maintenance the repayment schedule recomputation is provided for in the following cases:

1. complete or partial prepayment;
2. changes in the loan agreement parameters (loan term, loan agreement interest rate, parameters of monthly commission fees);
3. automatic updating such repayment schedule in the event that the client is repaying debts when due, as well as in the event of repaying overdue debts.

Agreement Termination
The Module is providing for the following functionality for agreement termination:

1. Fixing an agreement termination date. On a required date the entire current unpaid debt is transferred to arrears with the possibility to suspend interest accrual on the overdue debt;
2. Recording penalties imposed on a client at law:
3. Debt derecognition:
   • at the expense of reserves;
   • at the expense of the bank’s costs.

Automatic Agreement Servicing
The operations on servicing consumer products are completed in the automatic mode within the bank’s business day. In order to observe the required sequence of actions a dispatcher of operations is used — a program module which is analyzing the state of the client’s accounts and agreements and also automatically recording the required accounting cases. A set of such accounting cases depends on the state of the client’s account and agreement , operation completion date and a list of services activated within the agreement. Such operations in dispatcher of operations are completed in a multiflow mode making it possible to process a great number of agreements within a minimum period of time. The list and sequence of operations in the Module current version is given below:

1. on the stage of opening the bank’s business day:
   • drawing up invoices for the next payment period;
   • setting up new values of the bank’s tariffs;
   • extending a loan to the client’s account provided such loan is extended not on an agreement registration date ;
   • monthly computation of penalties for overdue debts;
   • debt repayment;
   • monthly interest accrual.
2. within the bank’s business day:
   • debt repayment.
3. prior to closing or on the stage of closing the bank’s business day:
   • transfer of funds from the client’s auxiliary accounts to repay overdue debts under the agreement;
   • analyzing requests for effecting prepayment and (if so required) recording accounting cases in respect of such prepayment;
   • automatic computation of an exposure group under the agreement;
   • accounting of the change of the exposure group ;
   • automatic generation of Provisions for Probable Loan Loss and Provisions for Probable Loss in the group of tied up borrowers ;
   • Arrears transferal;
   • Conducting of accounting cases on agreement termination.

Proceeding from the processing results the history of amending major agreement parameters is automatically generated and protocols of exception cases are executed.