Late Renewal
When a bank or customer renews the condition fixing after the current condition fixing period ends (and the new condition fixing takes effect on the date of renewal), this is referred to as “late renewal”.
If there is no agreed renewal period at the end date of the current condition fixing period, then the account is locked and a post-processing order (PPO) is created.
Any gap between the old and the new condition fixing periods are filled with an interim condition fixing and interim inpayment agreement created by the renewal order during execution. Interim inpayment agreements are created with zero conditions.
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 Oct 1, 2008 |
Individual condition 3: |
Jun 1, 2008 to Feb 1,2009 |
Individual condition 4: |
Dec 1, 2007 to May 1, 2008 |
Interim condition fixing period: |
Jan 1, 2008 to May 1, 2008 |
Date of renewal: |
May 1, 2008 |
New condition fixing period: |
May 1, 2008 to Jan 1, 2010 |
With late renewal, all individual conditions that are valid on the start date of the new condition fixing period, that is, on May 1, 2008, are proposed for inclusion in the new condition fixing. Therefore, only individual conditions 2 and 4 are proposed at renewal. Individual condition 1, which ends before the start date of the new condition fixing period, is not proposed at renewal. Individual condition 3, which is valid after the start date of the new condition fixing period, is deleted.
The following figure illustrates late renewal:
