Maintaining Term Agreements for
Fixed-Term Deposits
Use
On the Term Agreement: Fixed Term Deposit tab page you can specify the term agreement details that are used in processes such as collection, fixing, and calling. You can also define if the system is to initiate correspondence (about the term agreement details) to the customer.
Prerequisites
You have enabled the Term Agreement for Fixed Deposits attribute for the product on which the account is based in Customizing for Bank Customer Accounts (BCA). Enable the product attribute by choosing Master Data ® Product Definition ® Product ® Create Product or Change Product.
To default a minimum deposit for the account, you have defined a valid amount in Customizing for BCA by choosing Master Data ® Product Definition ® Product ® Maintain Minimum Deposit.
Procedure
Group Box for Term Agreement
Contract Amount, Minimum Deposit, and Maximum Deposit
The system checks whether the contract amount is within the minimum and maximum deposit range that you have defined.
Collection Date
The system updates the Collection Date based on the posting day shift that you defined in Customizing for BCA under Account Management ® Basic Functions in Account Management ® Maintain Payment Transaction Settings for Deposit Banking ® Posting Day Shift for Automatic Collection. The number of days that you specified in Posting Date Shift for Internal Posting is used if the Capital Reference Account for Collection is an internal account, while the Posting Day Shift for External Posting is used if the collection reference account is an external account. The Term Start date is used as the Collection Date if you do not define a posting day shift.
Term Agreement Status
You can change the term start date only if the term agreement has the Zero or Created status. Further, you can change the term duration, the end of term, and the contract amount only if the term agreement has any of the following statuses:
· Zero
· Created
· In Postprocessing
· To be Rolled Over
· In Correction Mode
The term agreement receives the In Postprocessing status if an error occurs when you execute any of the following reports:
· Collect Deposit Amount for Fixed-Term Deposit
· Fix Fixed-Term Deposit Account
· Call Fixed-Term Deposit Account
You can use the Postprocess Fixed-Term Deposit Accounts report to identify term agreements with the In Postprocessing status, and then manually process such term agreements.
Group Box for Terms
Specify the term duration details in this group box. To compute the term end or the term duration, choose Calculate Term/End of Term. If the computed term end falls on a non-working day, you can choose to change the term end date. In this case, the term that you had originally defined is displayed in the Original Term field, which is used to compute the rollover term for an identical rollover.
You create a term agreement with the following details:
Term duration is 30 days
Term start is July 6, 2005
Interest calculation method is 360/360
The computed term end is August 6, 2005 (a non-working day)
You postpone the term end to the next working day.
Thus, the term duration becomes 32 days while the original term remains 30 days.
The system makes the following checks on the term duration details that you specify:
· The Term Start is on or after the account opening date.
· The term duration is within the minimum and maximum term duration that you have defined.
When a term agreement is rolled over, the following information is automatically updated based on the rollover data that you have defined for the account:
· Contract amount
· Term start
· Term end
· Term duration
Term Unit in Interest Days or Calendar Days
You can specify the term duration in interest days, calendar days, months, or years. The number of days for which interest is paid is called Interest Days while the actual number of days between the term start and the term end is the Calendar Days.
To enable you to compare the number of interest days and calendar days, the corresponding term duration in calendar days is automatically displayed when you specify the term duration in interest days. Similarly, the term is also displayed in interest days when you specify the term duration in calendar days.
You create a term agreement with the following details:
Term start is July 01, 2005
Term duration is 30 Interest Days
Interest calculation method is 360/360
The computed term end is August 01, 2005.
Thus, the term in Calendar Days is 31 while the term in Interest Days is 30.
Group Box for Print Options
This group box allows you to specify if correspondence to the customer is to be initiated.
Certificate/Term Fixing
Set this indicator to inform the customer about a term agreement that is fixed. You may, for example, want to issue a deposit certificate containing details of the terms and conditions.
The system calls the Business Transaction Event (BTE) 11035 at the end of the Fix Fixed-Term Deposit Account report.
Prenotification of Maturity
Set this indicator to notify the customer about a term agreement that is nearing the term end and specify when the customer is to be notified in the Number of Days field. The number of days that you enter in this field must be less than the duration of the term agreement.
The system calls the BTE 11036 on the predefined date when you execute the Prenotification of Maturity-Term Deposit Accounts report.
Redemption Confirmation
Set this indicator to notify the customer about a term agreement that has reached the term end. You may, for example, want to update your customer on whether the amount was transferred to a reference account, rolled over, or disbursed.
The system calls the BTE 11037 at the end of the Call Fixed-Term Deposit Accounts report.
To initiate the correspondence, you must implement the sample BTEs that are provided.
Correspondence is initiated for all term agreements (including rollovers) that are selected by the corresponding report.
Reference Accounts
You can select either an internal or an external account as a reference account.
You select the account identification details for an external reference account based on the identification method that you have defined for the bank area of the referencing account. Define the recipient account identification method in Customizing for BCA by choosing Account Management ® Basic Functions in Account Management ® Set up Recipient Account Identification.
You can only select Active accounts as reference accounts.
Capital Reference Account for Collection
When you execute the Collect Deposit Amount for Fixed-Term Deposit report, the system collects the contract amount from this account. You can also use the Collection button to manually collect the contract amount from this account.
Capital Reference Account for Disbursement
When you execute the Call Fixed-Term Deposit Account report, the system transfers the contract amount on maturity or the partial disbursement on rollover to this account. If you do not specify a reference account for balancing, the interest amount is also transferred to this account.
You need not enter a disbursement reference account if you have specified a special suspense account in Customizing for BCA by choosing Account Management ® Maintain CpD-Accounts for Special Processes.
Group Box for Term End Action Details
Action at Term End
When a term agreement reaches the term end date, the system uses the following options to determine whether to rollover or disburse the contract amount:
· Repayment
The system transfers the contract amount and the interest amount to the disbursement reference account. The interest amount is transferred to the disbursement reference account only if you have not defined a balancing reference account.
· Identical Rollover
Specify the number of rollovers. An identical rollover has the same term duration as the current term agreement.
· Different Rollover
Specify the number of rollovers and the individual term details for the future term agreements.
For rollovers, the following additional group boxes are displayed:
Contract Amount Adjustment for Next Rollover
To specify an increase or decrease in the contract amount for the next rollover, choose the required option in the Adjustment Type field and specify the amount in the Markup/Markdown Amount field. The Collection Date field is automatically updated and displays when the markup amount is to be collected.
For the subsequent rollovers, you can specify the increase or decrease in the contract amount in the Rollover group box.
Rollover
If you have specified rollover defaults for the product, the system automatically updates this group box. The Rollover Date is the term end date of the previous term agreement.
Trigger Account Closure
Set this indicator to update the account closure date (in the Basic Data tab page) with the term end date when a term agreement matures. When you execute the Call Fixed-Term Deposit Accounts report, the system ensures that there are no more rollovers and updates the account closure date.
This indicator is ignored if you have already defined an account closure date.
Historical Details
This group box lists details of the term agreements that have been called.
Changing the Values of a Term Agreement That is Fixed
To change the term duration, the term end, and the contract amount for a term agreement that is fixed, choose Fixed-Term Deposit Correction and make the required changes.
You may be required to disburse the contract amount before the term end. In this case, you can change the term end date and execute the fixing and calling reports.
The system subsequently performs the following activities:
· Changes the status of the term agreement to In Correction Mode.
· Confirms that the new contract amount falls between the minimum and maximum deposit range.
· Confirms that the new term end date is on or after the current posting date. In addition, the term end date must be before the account closure date.
You can then collect the difference, if any, between the contract amount and the account balance, and fix the corrected term agreement once again.