Backdated Early Renewal
When a bank or customer agrees a new condition fixing or inpayment agreement period on the date of renewal, and the starting date of the new condition fixing or inpayment agreement falls before the end of the current condition fixing period, but the new condition fixing period begins at a time before the date of renewal (backdated), this is referred to as “backdated early renewal”. Backdated Early Renewal is an unusual scenario and does not often occur.
Impact
Backdated early renewal has the following impact:
The existing condition fixing is shortened.
The existing inpayment agreement is shortened.
Example
Consider the following loan contract:
Loan contract details |
Date(s) |
Current condition fixing period: |
Jan 1, 2007 to Jan 1, 2008 |
Current agreement period: |
Jan 1, 2007 to Jan 1, 2010 |
Individual condition 1: |
Jan 1, 2007 to Oct 30, 2007 |
Individual condition 2: |
Jan 1, 2007 to Jan 1, 2008 |
Individual condition 3: |
Jan 1, 2007 to Jun 1, 2007 |
Individual condition 4: |
Dec 1, 2007 to May 1, 2008 |
Date of activation of the renewal order: |
Oct 1, 2007 |
New condition fixing period: |
Aug 1, 2007 to Jan 1, 2010 |
With backdated early renewal, all individual conditions that are valid on the start date of the new condition fixing period, that is, on Aug 1, 2007, are proposed for inclusion in the new condition fixing. Therefore, only individual conditions 1 and 2 are proposed at renewal.
Individual condition 3, which ends before the start date of the new condition fixing period, is not proposed at renewal.
Individual condition 4, which is valid after the start date of the new condition fixing period, is deleted.
