Locking Loans
  • 22 Nov 2019
  • 3 Minutes To Read
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Locking Loans

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Overview

Mambu allows you to lock and unlock loan accounts to better manage situations where you need to stop applying interest, fees or penalties. Besides the locking of the mentioned activities, locked accounts do not accept transactions posted to them unless the user has permission to post transactions on a locked account.


Locking Loan Accounts

In order to lock a loan account go to More > Lock Account, add any comments and confirm which of the below 3 Activities should be suspended. Any combination or the three, or none of them, may be selected:

  1. Applying Interest
  2. Applying Fees
  3. Applying Penalties

It is possible to choose which activity in the account should be suspended at any time. For example: fees can additionally be locked on the account where interest has already been previously locked. These updates can be made with the Lock Account function. Details of the activity currently locked will be displayed in the account’s overview.

Lock Interest Application:

  • An interest Locked transaction will be logged on the account (under the ‘Transactions’ tab)
  • Interest will still be accrued, but it will not be applied (in other words: Interest Applied transactions will not be logged during the time the account is locked)

Lock Fee Application:

  • Applies only to “Late Repayment” fees
  • A Fees Locked transaction will be logged on the account (under the ‘Transactions’ tab)
  • Fees will not be applied (Fee Applied transactions will not be logged during the time the account is locked)

Lock Penalty Application:

  • Penalty Locked transaction will be logged on the account (under the ‘Transactions’ tab)
  • Penalty transactions will not be applied (Penalty Applied transactions will not be logged during the time the account is locked). Depending on the chosen Penalty calculation method: Penalties calculated on the outstanding principal balance will still be accrued on the account, but not applied. Penalties calculated on the overdue balance will not be accrued, nor applied while the account is locked
Please Note
There is no accounting layer supporting the locking functionality. If particular activity on loan account is locked - it is simply not recognized in the ledger at all.

Account State Changes

When a loan account is locked, its state will change to “Locked” shown in brackets next to  the main account state - i.e. the account will be set to:

  • In Arrears (Locked) if it was in arrears before being locked
  • Active (Locked) if it was an active, performing loan

All activities and dates associated with locking and unlocking will be tracked in the account's transactions, allowing also to use custom views reports in order to audit these accounts and manage any further workflows required (e.g. follow-ups or specific collections activities).

Please Note
Automated transfers will not be made if the account is in Locked state

Unlocking Loan Accounts

In order to unlock a loan account go to More > Unlock Account. Unlocking functionality immediately unlocks all the locked activities and as a result:

  • The account changes state to back “Active” or in “Arrears”
  • Total amount of Interest Accrued during the time when the account was locked will be automatically applied and corresponding “Interest Applied” transaction will be logged in the “Transactions” tab
  • Fees will start to be applied again from the date the account is unlocked
  • Penalties calculated using the Overdue balance methodology (based on Overdue Principal or Overdue Principal + Overdue Interest) will start to be applied again from the date the account is unlocked
  • Penalties calculated using the Outstanding balance methodology that were accrued when the account was locked will remain accrued and be applied to the account on the installment due date
  • Respective Unlock transaction will be logged on the account (under the ‘Transactions’ tab)
Please Note
Each of the Activities that were locked can be unlocked separately by using the Lock Account function. Once one of the activities is unticked - it will be considered unlocked and the appropriate “Unlock Transaction” will be logged in the ‘Transactions’ tab. Please note that this option should not be used to change the state of the Account as such: even if all the activities in the locking screen are unticked, the state of the account will remain “Locked” until the “Unlock Account” function is used.

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