[Mifos-developer] Configurable Repayment Order - Pay Overdue Interest First

[Senthilnathan Dharman]

Hi

i went through the configurable repayment order - "pay overdue interest first"  help.

Configurable Repayment Order - Pay Overdue Interest First

The standard order of how a payment gets applied in Mifos is Penalties, then Fees, then Interest and then Principal. A number of users let us know on the mailing list that Central Banking Regulations in India were requiring all overdue interest to be collected prior to paying down future principal.  You can now set Mifos up to automatically pay overdue interest first - we've added a configuration value to activate the new repayent order enabling all overdue and accrued interest to be paid off first.  For example if you have a current installment of $500 (400 principal and 100 interest) and an overdue installment of $500 (400 principal and 100 interest) and make a payment of $500, it will now be applied as such - paying off the $100 in overdue interest first, the $100 in current interest and then the remaining $300 towards overdue principal.  In the repayment schedule, the interest that is due is called out in parenthesees.

 i have a clarification on the below.

 For example if you have a current installment of $500 (400 principal and 100 interest  and 50 penalty) and an overdue installment of $500 (400 principal and 100 interest 50 penalty) and make a payment of $500.

How will the payment be applied?

regards

senthil

[Edward Cable]

Senthil,

I will let one of the developers respond to confirm this but I think the payment order if you have it configured to pay overdue interest off first would be the following (Overdue interest, then penalties, fee, interest, then principal)

So in your example of $500 payment

First $100 would go towards overdue interest, next $100 to the penalties, next $100 to the current interest and the remaining $200 to principal. 

Natalia - could you confirm that this is the case?

Ed

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[Natalia Szprega]

Hello,

Yes Ed, you are right with this order.

Senthil, you can always get quick help with Mifos documentation. In this case you can check: http://mifos.org/documentation/configuration#configuring-payment-order

Regards,
Natalia

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