Processing Interest Capitalization and Payment
Core Banking calculates the accrued interest for each deposit while running its Start of Day scheduled job. The interest calculation depends on the contract and banking product configuration, as follows:
For Interest Payment Type = Maturity at the banking product level
If the deposit is liquidated at maturity date, which means that the customer receives the total interest accumulated for the period during which the deposit was made, or the sight interest if other transactions like transfer or withdrawal occurred in the period between activation and maturity date.
If the deposit is liquidated before maturity date, the customer receives only the sight interest and only if a sight interest is configured on the banking product. If there is no sight interest configured, the customer receives only the initial amount.
If a withdrawal or transfer transaction occurs during the deposit contract's life cycle (possible only if the checkbox Allow withdraws is selected on the banking product configuration), the sight interest is paid (if there is a sight deposit configured on the banking product) and calculated taking into account the amount and the period of time the funds were in the account.
If one or more top-up transactions occur during the deposit contract's life cycle (possible only if the checkbox Allow top-ups is selected on the banking product configuration), the total interest rate is paid, calculated taking into account the amount and the period of time the fund were in the account.
For Interest Payment Type = any other value except Maturity at the banking product level
If the interest payment type is set to Monthly, Yearly, Daily or Quarterly then the interest is calculated and paid taking into account this periodicity, on the date specified in the deposit contract.
If the deposit reaches maturity, the total interest rate is paid according to the periodicity and the date specified on the contract, in the current account or in the deposit account, depending on how the deposit banking product was configured.
If the deposit contract doesn’t reach the maturity because it is liquidated in advance, but one or more interest payments were already made, Core Banking recovers the interest paid from the deposit amount. The interest recovery is made if the deposit contract reaches maturity, but during the deposit contract's life cycle, at least one withdrawal or transfer transaction was made (possible if Allow withdraws is checked on the banking product configuration).
If the DepositAggregateItemValues Core Banking system parameter's value is set to False, Core Banking recovers the entire interest paid until that moment and after that the sight interest from the beginning until the transaction date is paid (if a sight interest is configured on the banking product). If the DepositAggregateItemValuesCore Banking system parameter's value is set to True, the system recovers the difference between the paid interest and the sight interest that should be paid (if there is a sight interest configured on the banking product).
The interest to recover value affects the deposit amount or the interest amount, depending on the deposit banking product configuration: with interest capitalization or not, with interest payment on the maturity date or on a specific interval.
If the deposit is without capitalization, which means the interest is paid in the current account, in case a withdrawal transaction occurs, the interest already paid is recovered from the deposit amount.
For example, if a deposit is open for a period of 3 months with a monthly interest payment and the customer orders a withdrawal after the first month, the interest already paid in the current account is recovered from the deposit amount.
If the deposit is with capitalization, the interest is paid in the deposit account, so in case a withdrawal occurs, the interest is recovered from the deposit amount containing the initial value + the interest already paid, which means the initial amount is not affected.
The Generate Deposit Payments scheduled job performs the payments for the calculated interests on the deposit's maturity date. You can view the paid interest for a deposit in the Payments section:
Open the payment record to view more relevant details:
The interest is paid into the current account specified during deposit creation:
