Next, you can set the interest on the unused credit limit. If the borrower has not used their available credit limit, the lender can charge a fee on an unused limit.
If you want to enable the Interest on unused limit, check the Enable commitment fee checkbox:
Once the commitment fee is enabled, fill in the parameters:
Interest type
List
Select the interest calculation type.
You can choose between:
fixed,
floating rates.
Days in year
List
Select the day-count convention used for calculating the accrued interest. Predefined values available:
ACT/360 (actual number of days in a month and 360 days in a year),
ACT/365,
30/365,
30/360.
Reference rate
List
Select the reference rate. It specifies which reference rate is used:
EURIBOR-6M,
EURIBOR-3M,
EURIBOR-1M,
EURIBOR-1W,
LIBOR-USD-3M.
Note: this parameter is available if the Interest type = Floating.
Negative rate handling
List
Select the negative rate handling. It specifies the way how the system handles the negative reference rate. The predefined values are:
The negative base rate is changed to 0. If the reference rate value equals to or is smaller than 0, it is equated with 0. Only the contract margin rate is used for interest calculation.
The negative base rate is used, but the total cannot be negative. Thus, regardless of the reference rate value, it is used for interest calculation, but with the restriction that the total reference rate and the contract margin rate cannot be below 0.
Note: this parameter is available if the If Interest type = Floating.
Penalty
Checkbox
Select the checkbox if you want to add the penalty to the principal. Note: that the penalty has a standard setup. To learn more about penalty configuration, see the section.
