As you can see all fields for 'Recalculate Interest' are mandatory fields.
Recalculate Interest Fields:
Interest Recalculation Compounding on
Fee and Interest
If you select None, next period (month or week) interest will be calculated on principal only.
If you select Fee, next period interest will be recalculated based on Principle + Fee .
If you select Interest, next period interest will be recalculated based on Principle + Interest
If you select 'Fee and Interest' next period interest will be recalculated based on Principle + Interest + Fee
Advance Payment Adjustment Type
Reduce EMI Amount
Reduce Number of Installments
Reschedule next repayments.
Whenever advanced payment for next installments is made by the client, we can either reduce EMI amount or we can reduce the number of installments. Otherwise we can reschedule next repayments
'Reduce EMI Amount' is selected when we want to keep the same number of installments as previous installments and EMI is reduced to fit into those number of installments.
'Reduce Number of Installments' is selected whenever a client makes advanced payments in order to close his loan account with less number of installments.
'Reschedule next repayments' is selected where advanced repayments from the client is applied/adjusted to the next scheduled repayments so that a client may only need to pay his interest.
Frequency for recalculate outstanding principle
Once the client makes advance repayments, his outstanding principal may be recalculated weekly, fortnightly, monthly, quarterly and so on, thereby reducing the weekly, fortnightly, monthly outstanding balance.
Frequency Interval for Recalculation
(enter numbers) 1 or 2 or 3 , so on
This field is accompanied with previous field, that is, 'Frequency for recalculate outstanding principle'. If you enter 1 here and you select monthly, then outstanding balance (reduced) will be calculated for every month.
Frequency Date for Recalculation
Here you select the date on which reduced outstanding balance will be calculated.
The Client's Loan Account Overview has two types of schedules, namely 'Original Schedule' (the schedule at the time of disbursement) and 'Repayment Schedule' which is modified along with the way Client makes his repayments:
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As you can observe, due to advance repayment on 2nd October 2014, the number of repayments are reduced by one. (Here, in Recalculate Interest, the 'Advanced Payment Adjustment Type' is selected as 'Reduced Number of Installments'.