Calculation method for FTD-51A Product type

[rohankamat1985]

Dear Friends,

I have a query regarding the calculation of interest that happen for quarterly compounding fixed deposit in 51A product type.

SAP has provided the method of calculation on day basis that is ACT/365 , ACT/366.

Is there any provision where we can use month based calculations , like divide by 12 method?

Any enhancements are possible in this case?

I am asking this question as the flow that SAP system is calculating is not matching with the flows that provided by the bank .

Regards,

Rohan

[Former Member]

If the bank calculates interest  on a monthly basis and that causes mismatch with Act/360 or Act/365 on your end then it sounds like the bank doesn't take the number of days in the month into account and treats each month the same.

You can try using 360/360 or 365/365 calculation methods depending on the bank's base, usually it would be 360/360. That should give you the same interest each month, provided the base is the same.

[rohankamat1985]

Hi Ella,

Yes, you are right. Bank is not considering the day based calculation.

They are following the method of (number of days in a month * 12) . This, they are multiplying in denominator.

For some quarters, they are considering quarters as 3.1 , 2.9 months, etc

If they use this method, the flows calculated by them will never match with that in SAP because their method is not fixed.

I have tried all possible permutation and combinations of the methods given my SAP, but its not working.

The only option left is edit the flows manually in cash flows.

Regards,

Rohan

[Former Member]

Yes, it is sounds like you have to do either manual editing of the flows in that case. We do that on some of our deposits too.

We have a similar issue with rounding. The banks tend to round up, but not always, you never know.

[former_member198450]

Dear Rohan,

Please change the frequency option to monthly or double click on condition option in system. It will fulfill your requirement.

It would have been great if you share screenshot of your issue for better understanding.

Regards,

Jain

[rohankamat1985]

Hi Jain,

This wont fulfill our requirement. The capitalization of interest should happen on every quarter end. But they don't want to use the standard SAP formulas of ACT/365. ACT/366, etc.

They want to modify the interest calculation formula to month based like 1/12, for quarter 3/12, etc or in fractions like 2.5 months, 3.5 months., etc

Its similar to following formula:-

A=P (1+r/n) ^nt

where, A= Amount
           P = Principal

           n= number of times per year, interest is compounded

           t= tenure in years

           r= rate of interest

But these modifications(if ever done) will deviate the accurate formulas provided by SAP.

Regards,

Rohan

[sourabh_muthreja]

Dear Rohan,

Then use exponential l interest calculation method , then it will fulfill your requirement

[sourabh_muthreja]

pls find the attachment

[sourabh_muthreja]

use int. calculation method  Act/ActE.

[rohankamat1985]

Dear Jain and Sourabh,

I will try this and let you know.
As of now, it is not fulfilling the requirement. I will try for other sample of FDs

In the FD which I am trying, the bank is deducting the TDS from the principal amount on 31st march due to which the principal amount is going below the invested principal amount.

Eg:- Original principal amount 1150000000

        Principal after deducting TDS  1149446330     (TDS as on 31st march was 553670)

Regards,

Rohan