Distribution to
Receivables 
Use
This function describes how the declaration of purpose is used to distribute collaterals and their values to all the collateralized receivables. The distribution of collateral value is done both according to the maximum risk and the current risk.
Activities
The system follows the following distribution process based on the declaration of purpose:
1. Distributes the available collateral value to the collateral agreement portions based on their ranking ratio.
In a collateral agreement, if the collateral agreement portions share the same ranking ratio, the system distributes the collateral value to the collateral agreement portions in the ratio of the portion amounts.
2. Initiates the process of distributing collateral value to receivables.
3. Checks if a receivable is assigned to more than one collateral agreements.
4. If a receivable is assigned to a single collateral agreement, the system performs the collateral value distribution by using the priority of the receivables.
5. If a receivable is assigned to more than one collateral agreements, the system performs the collateral value distribution by using the ranking class of the collateral agreements.
If the collateral agreements or their portions have the same ranking class, then the system distributes the collateral value in the ratio of the collateral agreement amounts.
6. If multiple receivables are assigned multiple collateral agreements, the system performs the collateral value distribution as follows:
...
a. Classifies the receivables based on the priority. It then considers the ranking classes of collateral agreements, to distribute the collateral value to the receivables (in order of their priority).
For each receivable, the better ranking class is first considered for distribution. This distribution process is repeated for all the collateral agreements in a data constellation (till there are no better ranking classes for all the receivables).
b. If there are collateral agreements and receivables that share the same priority, the system distributes the collateral value in the proportion of the receivable amounts.
7. If there is collateral value remaining after the distribution process that is not yet distributed and receivables yet to be collateralized, the system considers the priority to distribute the remaining collateral value to the receivables.
Example
Scenario 1: Single collateral agreement assigned to multiple receivables – distribution of collateral value based on receivable priority.
Portion ID |
Portion Percentage |
Portion Amount |
Portion Priority |
Allocated Collateral Value |
1 |
40% |
4000 |
1 |
3200 |
2 |
3000 |
1 |
2400 |
|
3 |
30% |
3000 |
1 |
2400 |
CAG ID |
Portion ID |
Allocated Collateral Value |
RBL Priority |
RBL ID |
Amount required by RBLS |
Allocated Collateral Value (to RBLs) |
Coverage Gap |
Cag1 |
1 |
3200.00 |
1 |
Rbl1 |
500.00 |
500.00 |
0.00 |
|
|
|
2 |
Rbl2 |
2000.00 |
2000.00 |
0.00 |
|
|
|
3 |
Rbl3 |
1500.00 |
700.00 |
800.00 |
|
|
|
|
|
|
|
|
|
2 |
2400.00 |
1 |
Rbl4 |
1000.00 |
800.00 |
200.00 |
|
|
|
1 |
Rbl5 |
2000.00 |
1600.00 |
400.00 |
|
|
|
|
|
|
|
|
|
3 |
2400.00 |
1 |
Rbl6 |
4000.00 |
2400.00 |
1600.00 |
Scenario 2:Multiple collateral agreements and one single receivable
CAG ID |
Ranking Class |
Allocated Collateral Value |
RBL Priority |
RBL ID |
Amount required by RBLs |
Allocated Collateral Value (to RBLs) |
Coverage Gap |
Cag A |
1 |
100 |
1 |
Receivable 1 |
120 |
100 |
|
Cag B |
2 |
50 |
1 |
Receivable 2 |
120 |
20 |
|
Scenario 3: Multiple collateral agreements and one receivable with same ranking class and priority (proportional distribution of collateral agreements):
CAG ID |
Ranking Class |
Allocated Collateral Value |
RBL Priority |
RBL ID |
Amount required by RBLs |
Collateral value allocated to RBLs |
Coverage Gap |
Cag A |
1 |
100 |
1 |
Receivable 1 |
120 |
80 |
|
Cag B |
1 |
50 |
1 |
Receivable 2 |
120 |
40 |
|
Scenario 4: Multiple collateral agreements and multiple receivables (complex scenario):
CAG ID |
Ranking Class |
Allocated Collateral Value |
RBL Priority |
RBL ID |
Amount required by RBLs |
Collateral value allocated to RBLs |
Coverage Gap |
Cag A |
1 |
60 |
1 |
Receivable 1 |
150 |
60 |
30 |
Cag B |
2 |
100 |
1 |
Receivable 1 |
150 |
60 |
30 |
Cag B |
2 |
100 |
1 |
Receivable 2 |
100 |
40 |
20 |
Cag C |
1 |
40 |
1 |
Receivable 2 |
100 |
40 |
20 |
Scenario 5: Multiple collateral agreements and multiple receivables (complex constellation):
CAG ID |
Ranking Class |
Allocated Collateral Value |
RBL Priority |
RBL ID |
RBL Max Risk |
RBL Current Risk |
Collateral value allocated to RBL |
Coverage Gap |
Cag A |
1 |
500 |
1 |
Receivable 1 |
100 |
100 |
100 |
|
|
1 |
500 |
2 |
Receivable 2 |
200 |
200 |
200 |
|
|
2 |
500 |
3 |
Receivable 3 |
400 |
327.27 |
200 |
127.27 |
Cag B |
1 |
200 |
1 |
Receivable 3 |
400 |
400 |
72.73 |
127.27 |
|
1 |
200 |
1 |
Receivable 4 |
50 |
50 |
9.09 |
40.91 |
|
1 |
200 |
1 |
Receivable 5 |
500 |
500 |
90.91 |
24.48 |
|
1 |
200 |
1 |
Receivable 6 |
150 |
150 |
27.27 |
7.34 |
Cag C |
1 |
1000 |
2 |
Receivable 5 |
500 |
409.09 |
384.61 |
24.48 |
|
1 |
1000 |
2 |
Receivable 6 |
150 |
122.73 |
115.39 |
7.34 |
|
1 |
1000 |
1 |
Receivable 7 |
300 |
300 |
300 |
|
|
1 |
1000 |
1 |
Receivable 8 |
200 |
200 |
200 |
|
Cag D |
2 |
400 |
2 |
Receivable 7 |
200 |
0 |
|
|
|
1 |
400 |
1 |
Receivable 9 |
100 |
100 |
100 |
|
|
1 |
400 |
1 |
Receivable 10 |
200 |
200 |
200 |
|