Creating a Deposit Contract

1. Open the Contracts page as described in the Managing Contracts section.

2. Click the Insert button to display the Add Contract page is displayed, the initial page when you insert any type of contract.

   

3. Fill in the following fields:

• Customer Type - Optionally, select the type of the customer for the contract, to filter the displayed customers in the next field.

• Customer - Select from the list the customer for whom you are creating a contract.

• Product Type - Select from the list the product type to filter the list of banking products accordingly.

• Banking Product - Select from the list the desired banking product.

4. Click the Save and Reload button.

Core Banking saves the contract in Draft status, with minimum default information, such as an auto-generated contract number, created by, version and version number. The previously provided details are kept on screen in the General Data section, but they are no longer available for update. The Currency has been updated from the banking product level.

Proceed to the next steps where the details about the contract are captured and validated against the underlying product, setting the basic elements for the creation of a contract such as current account, interest rate, participants, fees, and contract covenants, within the newly displayed Overview tab.

1. Fill in or modify the following information:

   • Current Account - Select a current account from the list of current accounts that have the same currency as the contract and belong to the customer. The selected current account is debited for constituting the deposit account. If there are not enough funds in the current account, a specific message is displayed when trying to approve the contract. The same account is used for transferring the interest if the banking product is without capitalization and, at maturity, it is automatically credited with the deposit amount if the deposit was opened without auto-rollover.

   • Amount - Enter the amount used to constitute the deposit. There is a validation when approving the contract, so the amount must be between the minimum and maximum values set on the banking product.

   • Sales Channel - Select the channel through which the contract is created.

2. Optionally, fill in or modify the following information:

   • Contract ID - Enter a contract ID other than the contract number generated automatically by Core Banking when you saved the contract.

   • Activation Date - It is automatically completed with the system date.

   • Managing Branch - This represents the branch of the organization where the contract was created. Suppose you work in a branch or credit center, and you need cases to be linked to a specific location so that you can properly allocate them for further actions. It is automatically completed at contract saving time, but you can select another branch from the list.

   • Direct Debit Settlement Account - Select this checkbox if the direct debit settlement account functionality is turned on at the contract level. The value of the checkbox was set at the banking product level, but it can be modified at the contract level. The checkbox can be edited in all the statuses of a contract except Version Closed, Closed, and Canceled.

     NOTE  The Direct Debit Settlement Account setting at the customer level takes precedence over the setting at the contract level when creating new contracts. For existing contracts, Core Banking applies the setting configured within the CustomerToContractDirectDebitSettlementAcc system parameter.

In the Repayment Overview section you should enter the contract period and the first due date so that Core Banking can properly build the repayment schedule.

1. Fill in or modify the following information specific to the contract's repayment schedule:

   • Contract Period - This field is automatically completed with the maximum contract period as it was defined at banking product level. Edit this value as long as it remains between the minimum and maximum limits set on the banking product. The contract period is used together with Contract Period Type and Periodicity Type.

   • Contract Period Type - This field is automatically completed with the contract period type as it was defined at banking product level. You can't edit this value.

   • Maturity Date - This field is automatically completed with the contract maturity date, calculated based on the values of the Contract Period, Contract Period Type, Due Date and Activation Date. You can't edit this value.

   • Due Day - Enter the exact day of month for repayment. If it is set to 31, then the system takes the last day of month. If the periodicity and the repayments are set to every 30 days, Core Banking defaults the due date based on the activation date.

2. Click the Save and Reload button.

Enter the details about the Product Interest Rate applied to the deposit. Depending on the product definition again, you have a list of interest definitions that you can bring along to the contract.

To manage the product interest rate as it must be applied to this contract:

1. Fill in or modify the following fields:

• Interest Commission Item - This field is automatically completed with the interest & commission item defined at the product level, if only one item is found at the product level. If the selected product has more items, you must select one from the list.

• Product Interest - Select from the interest to be applied for this contract. Only the interests associated to the selected banking product are displayed within the list. Penalty interests cannot be selected here.

• Date for Review Interest Rate - Enter the date for reviewing the interest rate applicable for the remaining amount. This date must be between Activation Date and Maturity Date, otherwise, an error is displayed.
  For variable interest, this field is automatically completed with the Reference Rate Date + Reference Interest Period of the underlying interest definition, from the base type interest attached to variable interest. You can edit this field. For months where the date is overlapped, the last day of the month is used for the calculation.

2. If the underlying interest definition has referenced a variable interest rate, the details included other fields for you to complete:

• Margin – The margin applicable on top of the variable interest rate.

• Reference Rate Date – The date to be considered in order to arrive to the applicable rate for the underlying variable interest (EURIBOR as of 30th June 2022).

• Reference Rate – The underlying rate for the variable interest as captured in Core Banking for the date above.

3. Click the Save and Reload button.

Define the information about the contract interest rate in a table format, in the section Contract Interest Rate section, which appears only after saving the selected product interest rates. The Contract Penalty Interest Rate section, similar to the one above, helps you manage penalty interest rates applicable to the contract when there are overdue amounts according to the definition of penalty interest and included operation item elements. If the penalty interest has multiple interest values, at contract generation Core Banking brings only the penalty interest value for which the current date falls in the interest value interval.

You can edit the table cells, so you can customize the interest rates selected at the product level, if the interest and commission list was defined as negotiable, to obtain the desired interest rates configuration at the contract level. You can also add or delete interest rates, using the Add Interest Rate, Add Penalty Interest Rate, respectively the Delete buttons above the tables. Thus, the table enables you to work with multiple interest rates at the contract level.

To customize the information specific to each of the contract's interest rates:

1. In the Contract Interest Rate section, edit the existing information that was automatically completed based on your product interest rate selections:

• Interest - Automatically completed with the interest selected in the previous Product Interest Rate section. You can select from the drop-down list the interest to be applied for this contract. Only the interests associated to the selected banking product are displayed within the list. Penalty and overdraft interests cannot be selected here. Depending on the selected interest, other fields can be displayed to be filled in.

• Start Date - The interest's start date, automatically completed with the contract's activation date.

• End Date - The interest's end date, automatically completed with the contract's maturity date.

• Minimum Amount - The minimum amount of the contract for which the interest is applied.

• Maximum Amount - The maximum amount of the contract for which the interest is applied.

• From Installment - The first installment for which this interest is applied to the contract.

• To Installment - The last installment for which this interest is applied to the contract.

• Minimum Interest Rate - This read-only cell is automatically completed with the minimum interest rate applicable for the contract, defined at the banking product level.

• Fixed Rate - The fixed rate of the interest. You can only change it if the interest at the banking product level was marked as Is Negociable.

• Margin - This cell is automatically completed with the margin of the previously selected product interest. You can only change it if the interest at the banking product level was marked as Is Negociable. If the product interest was not selected, you can manually enter the margin.

• Reference Rate - This read-only cell is automatically completed with the interest type's definition's reference rate valid at the previously selected date.

• Total Interest Rate - This read-only cell is automatically completed with the calculated total interest rate of the previously selected product interest and any values entered for margin and reference rate. If the product interest was not selected or if the interest at the banking product level was marked as Is Negociable, you can manually enter the interest rate.

• Past Unnotified - This is read-only cell read-only checkbox. For contracts in Version Draft status, it shows whether there are days that already passed from the current month's not yet notified installment, days for which you can't change the interest rate.

2. After performing the desired changes, make sure that the interest rate(s) cover the entire tenor of the contract, from activation date until maturity date, and there are no overlapping intervals, otherwise an error prevents you from approving the contract.

3. Click the Save and Reload button.

To customize the information specific to each of the contract's penalty interest rates:

1. In the Contract Penalty Interest Rate section, edit the existing information that was automatically completed based on your product interest rate selections:

   

• Interest Name - Automatically completed with the penalty interests selected in the previous Product Interest Rate section. Only the penalty interests associated to the selected banking product are displayed within the list.

• Start Date and End Date - The penalty interest's start and end dates, automatically completed with the contract's activation, respectively maturity date.

• Fixed Rate - The fixed rate of the penalty interest. You can only change it if the interest at the banking product level was marked as Is Negociable.

• Margin - This cell is automatically completed with the margin of the previously selected product interest. You can only change it if the interest at the banking product level was defined as variable and marked as Is Negociable.

• Reference Rate - This read-only cell is automatically completed with the interest type's definition's reference rate valid at the previously selected date.

• Total Interest Rate - This read-only cell is automatically completed with the calculated total penalty interest rate as Fixed Rate or Margin + Reference Rate.

• Operation Item - The contract's operation item to which the penalty interest is applied.

2. After performing the desired changes, make sure that the penalty interest rate(s) cover the full contract period, from activation date until maturity date, and there are no overlapping intervals, otherwise an error prevents you from approving the contract.

3. Click the Save and Reload button.

Later, after contract approval, you can change the penalty interest rate by versioning the contract and editing the information in this section. Thus, the new penalty rate becomes effective after approving the contract version, only impacting future calculations and notifications.

If allowed from the product definition, you can amend the closure settings of the contract, the way Core Banking should behave once the deposit is liquidated and the contract can be closed. Most of the times this is not something that you have to access, but it adds extra flexibility at the contract level. This may prove useful if you suspect there may be reasons to keep a contract open for some time post recovering all amounts for instances when there may appear claims of funds (SEPA DD) or other similar cases.

The Closure Settings section is only displayed for contracts based on banking products having the Closing Is Flexible = True setting.

To amend the closure settings brought from product level here at the contract level:

1. Fill in or modify the following fields:

   • Automatic Closure – If selected, Core Banking automatically closes the contract once all other conditions are met. This field is automatically completed with the value defined at the banking product level, but you can modify it.

     • Select this checkbox to instruct Core Banking to close the contract automatically when the available amount becomes zero and there are no further amounts to be recovered, and after the number of days set as buffer before closure pass and Closure Date = Current Date.

     • Deselect it to instruct Core Banking to keep the contract open, regardless of the fulfillment of its maturity and balance criteria, waiting to be manually closed by changing its status to Closed.

       NOTE  
       You can perform contracts events as specified in the Allowed Transactions section of the banking product, plus manual closure while the contract is pending closure. Performing any other transactions displays an error message.

   • Real Time Closure – If you select this checkbox, when the amounts become zero and the deposit is not a automatically renewed at maturity, the contract is closed automatically. If Real Time Closure = True, then Buffer Close Days = 0 and Automatic Closure = True. For more details about the real-time closure, see Close Contracts RealTime(CB) Job.

   • Buffer Close Days - Enter the number of days used as buffer before automatically closing the contract. If Buffer Close Days > 0, then Real Time Closure = False. Core Banking waits the entered number of days after the contract's balances reach zero, and at the end of that day the contract is closed.

   • Balance Off Date – This is a system maintained field and it is populated with the date on top of which Core Banking adds the Buffer Close Days to arrive to the Closure Date.

   • Closure Date – This is a system maintained field and holds the date when the contract is closed. For automatic closure, the date is calculated by Core Banking as Balance Off Date + Buffer Close Days.

2. Click the Save and Reload button.

Once you defined the mandatory details, then saved and reloaded the contract, Core Banking updates some of the next sections on the page, based on product definitions:

Core Banking brings the Contract Participants, the Borrower being also Beneficiary of the funds. If needed, you can add other participants to the contract, like Guarantors, Co-Debtors, etc. There may be cases when some roles are mandatory for a product. Those are detailed in a separate section. If there is a mandatory role defined in the banking product definition, Core Banking displays an error on trying to approve the contract.

Another important section brought from the product definition is the Fees & Commissions. Depending on the system setup, you are allowed or not to amend fees and commissions in this section.

Contract Covenants section displays the covenants that applicants must abide by after approving the contract, configured at the product level. Such conventions are usually applicable for corporate clients that must meet certain requirements in order to continue to receive disbursements and not only: submit balance sheet every x months, have account turnover of at least x percent from average monthly turnover, provide other relevant documents from authorities. In this section, you can manage covenants for the contract. These covenants would need to be monitored procedurally; Core Banking doesn't have the logic in place to implement automated processes.

You can use the Contract Classifications section to capture various classifications that might be relevant for the financial institution for that contract at a moment in time. It is a placeholder for such details and there is no automated logic in place to update them. In implementation this can be used for other developments if required.