Support Center

Setting Up New Deposit Products

Last Updated: Sep 09, 2016 01:46PM CEST

 

Create a new deposit product

Relation between deposit products and deposit accounts

Types of deposit products

Overdraft products

Deposit products for individuals and for groups

Accounts ID Settings

Currencies

Interest Rate

Withholding Taxes

Deposits and withdrawals

Opening Balance

Term Length

Internal Controls

Product Fees

Accounting Rules

 

───────────────────────────────────────────────────────────────────────────────────────

 

Create a new deposit product

To create a new product go to Administration > Products > click on Deposits > New Deposit Product > enter all the product's terms and conditions > click Save Product.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Relation between deposit products and deposit accounts

Just as it happens for loan products and accounts, deposit accounts are all linked to a deposit product that has been previously created. For that reason, all terms and constraints that you define when creating a deposit product will then determine the deposit accounts created under that same product.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Types of deposit products

Mambu provides you with four types of deposit products with a set of terms that you can set according to your organization's needs.

 

 

A Savings Account product, will allow you to create accounts where clients can make deposits and withdrawals when they wish. The interest is posted at the frequency you choose and accrued over time. Doesn't allow overdrafts.

A Current Account is like a regular savings product, but also allows for overdrafts. Choosing this option will then let the account balances to go negative up to a certain limit.

For Fixed Deposit products, clients make deposits to open the account and can only withdraw the money after an established period of time. The account can't be closed or withdrawn before the end of that period.

In Savings Plan the client makes regular deposits into the account but can only withdraw the money after the maturity period is reached.

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Overdraft Products

Overview

Deposit Products of Current Account type have an option to Allow Overdrafts and define the overdraft conditions. If you select this option - accounts created under this product will allow for withdrawals beyond 0, i.e. the balance can be negative up to a certain limit.

When the account goes negative, the interest starts being charged on that account instead of added.

Overdraft Setup

In the New Deposit Product view for Current Account product type, there are 2 sections affecting setup for Overdrafts:

1 -  ‘Interest Rate’ section

This section refers for the most part to the positive (credit) interest application on current account products, apart from the “When is the Interest Paid Into the Account?” setting which impacts both positive (credit) interest and negative (debit) overdraft interest application frequency. If no interest application frequency is selected here, overdraft interest will not be applied to the account, only accrued.

If you don't want to pay positive (credit) interest on overdraft accounts, you can enter 0 in the field for interest rate. With this setup, the accounts created under this product will not pay any interest to your clients and only negative interest will be charged in case the account balance goes below 0 (as per the be settings defined in the ‘Overdraft Conditions’ section).

2 - ‘Overdraft Conditions’ section

If overdrafts are allowed for the product, the following settings become available:

Interest Rate Source

Two sources of interest rates are supported for Deposit Products allowing Overdrafts:

  1. Fixed Interest Rate - remains fixed for the entire term of the loan.
  2. Index Interest Rate - a floating interest rate, also known as a variable rate. It is calculated as a sum of a reference (benchmark) index interest rate and a specified spread (margin). As a result, the index interest rate will change together with changes in the reference (benchmark) index interest rate.

If the "Index Interest Rate" option is chosen, additional fields will become available:
  • Index source - here you can choose the source of your index rate from a predefined drop down list
  • Interest Spread constraints - to define constraints of spread that will be added to the reference index rate (default, minimum and maximum)
  • Interest Rate Review Frequency - how often should the overdraft interest rate be updated (reviewed)

You can find more details and examples of overdraft interest rate calculations in the overdraft section of the article ‘Interest Calculation Methods in Deposit Accounts’.

 Please note that regardless of the chosen source, the rate defined for overdraft products is always a daily rate.

Max Overdraft Limit

Maximum Overdraft Limit is a maximum negative balance that the current account can reach. No withdrawals will be possible if the account balance goes down to this limit.

 The limit for the overdraft defined here refers only to principal. So this is the limit a client can withdraw, but the accounts balance can go below this limit in case there are any fees or interest posted.


Days In Year

Two day count methodologies are supported in Mambu for Overdraft products: Actual/365 Fixed (365 days) and 30E/360 (360 days). You can find more details about calculations in the article ‘Interest Calculation Methods in Deposit Accounts’.

Accounts managed under Line of Credit

In this section you can decide if accounts created for this product can be managed in a line of credit or not. Under “Accounts Managed under Line of Credit”​ setup you will find the following options:

  1. Optional (default) -​ accounts created on this product can be managed in a line of credit, but it’s not required to have them in lines of credit
  2. Required - ​the account can’t be approved if it’s not associated with a line of credit
  3. No - ​accounts for this product are not allowed to be managed in lines of credit

You can read more about Working with Lines of Credit HERE

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Deposit products for individuals and for groups

You can check one of these options or both, if you want to make the product available for individuals and groups.

Selecting who will be eligible for the new product will make sure that when you create a new deposit account for a client, Mambu will only show you the products available for that type of client - individual or group - making the whole process more efficient and preventing mistakes.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Accounts ID Settings

The ID seetings allow you to customize the IDs for all deposit accounts which will later be created under this product.

 

Random Pattern

This is the default option and if you choose it, when you create a new loan Mambu will automatically generate an ID using the format you define.

By default, the template used will be @@@@###, in which @ represents a letter and #, a number. So in this case, Mambu would generate IDs like ABCD123, GHJE321 and so on.

You can change this pattern to any other sequence of numbers and letters you wish by using the symbols "@" and "#".

To setup a random pattern select the option from the menu > use a sequence of '@" and "#" to define your pattern.

 

Incremental Number

If all your account IDs follow a certain incremental sequence you should choose this option.

To define your loan's IDs with sequence numbers select Incremental Numbers > enter the number you want the sequence to start from.

 

────────────────────────────────────────────────────────────────────────────── Back to top

Currencies

Mambu allows defining deposit products in various currencies and performing transactions on the accounts in that currency.

In order to support a deposit account in different currencies, the currency has to be added under Administration -> Currency and the Exchange Rate must be set.
 

Setting up the same product in different currencies

If you need to have the same product available in different currencies, you can make a copy of the original product and enable the desired currency for each. Please take note that when copying a product and changing the currency all the amount limits and restrictions on the account keep the same numerical value, therefore they have to be adjusted for the new currency.
 

For example

Product "Savings" is created in USD, and you set up below amount limits on the product:


 

When copying the product and selecting Euro as the new currency, the limits will keep the same numerical value:

The new limits and amount settings have to be manually adjusted if the same value is desired in the organisation base currency, or you can customize the limits for each currency. In the above example you can set up the Maximum Withdrawal Amount to 891 Euro (based on an exact conversion of USD to Euro) or you can round it up to 900 Euro, depending on your internal policies.

 This applies for all amount limits and restrictions, so it is very important to update all sections (if defined): Deposit & Withdrawal limits, Fees, Overdraft Limit, Tiered Interest Rate (tier values), Opening Balance.
 

Account Transactions

Withdrawals & Deposits - All transactions will be performed in the account currency (defined at product level). If an exchange rate between the base currency and the deposit account currency is not defined under Administration (Currencies), then the transaction will not be allowed. A backdated transaction is also not allowed if the exchange rate was set after the date of the desired backdated transaction.

Transfers - When posting a transfer, only the loan and deposit accounts that use the same currency as the target deposit account will be available.

Disbursing a loan to a deposit account - only the deposit accounts that have the same currency as the loan (the base currency) will be shown.

Tellers Transactions - Tellers can post transactions using only the organization base currency. Teller users will be allowed to transact only on accounts that use the base currency. When posting transactions on other currencies, an error message will be displayed: "Tellers are allowed to post transactions only on accounts managed in {base currency}". Only the accounts that have the base currency, will be visible in the tellering widget.

Reports

All reports will be displayed in the organisation base currency. When converting a transaction from a foreign currency to the base one, the exchange rate available in the transaction entry date will be used. When converting an account amount from a foreign currency to the base one, the current exchange rate will be used.

Accounting

All journal entries will be performed in the organisation base currency. The accrued account interest and overdraft interest will be converted to the base currency when logging daily and monthly interest accrued in accounting.

Conversion rates:

  • Positive interest accrued: Buy Rate

  • Negative (overdraft) interest accrued: Sell Rate

Client Overview

The Accounts Summary will display each account in its own currency, but the Totals will display the total in the organisation base currency (after performing conversions for the balances in other currencies). The same applies for the Max Savings Balance widget under Closed Accounts.

Custom Views

The amounts displayed in custom views will be in the account currency. You can also customize your view by selecting "Currency" as filter, or as column.

 


────────────────────────────────────────────────────────────────────────────── Back to top

Interest Rate

For any type of deposit product you can choose if there will be interest paid into the account or not. For products accruing interest, you can then define the interest rate range and the periodicity that should be used for calculation.

Deposits and withdrawals into an account will make their balances vary between two postings of interest. As such, you can choose whether the interest will be calculated on the average or on the minimum balance of the account during that time.

You can also determine the period of time between the postings of interest.

To choose the account balance and to determine the period between postings, click on the dropdown menu > choose the option that applies.




 Please note that the “When is the Interest Paid Into the Account” section refers also to application of the negative interest on Overdraft accounts.


 

 

 

────────────────────────────────────────────────────────────────────────────── Back to top



Withholding Taxes

It is a regulatory requirement in many countries that organizations offering deposit accounts have to pay taxes on the interest paid on those accounts to clients - these are generally called "Withholding Taxes" because they are deducted from interest paid out to the client. 



The option under this section allows you to enable the withholding tax functionality - by checking the "Apply withholding taxes" checkbox under Interest Rate section (see screenshot above).

 The checkbox is visible only when "Interest paid into account” is checked and only if there is at least one Rate Source of type "Withholding Tax" defined under the "Rates" menu (see more in Customizing Your Account I > Taxes).

Once the taxes enabled, the actual applicable tax will have to be specified at account opening - see more in Creating a Deposit Account

After interest is applied on the account, Mambu will post a “Withholding Tax” transaction on the account, that will subtract the tax percentage of the applied interest, from the account balance. 

Notes:

  • This option can be disabled even if there are accounts opened in the product; if taxes are disabled, new accounts won't have applicable taxes, but the old accounts will retain them.
  • If the product has accounting enabled, then a "Taxes Payable" Liability GL Account has to be linked and will be used for booking the amount of taxes withheld and due to the government. 
  • The tax percent, source name and amount are available as placeholders in your contracts, receipts and templates.

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Deposits and withdrawals

Recommended Deposit and Maximum Withdrawal

In a savings account and saving plans you can determine if there should be a recommended deposit. The amount entered there will only serve as a guideline and not as a constraint. The client will still be able to make deposits that fall under or above that value.

On the other hand, the maximum withdrawal amount determines an exact value beyond which the client won't be able to withdraw money.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Opening Balance

In a Fixed Deposit product you can determine a minimum amount that clients will have to deposit to activate an account

Note: This is a mandatory field, but you can always enter 0 in which case the clients won't have to make a deposit to open an account.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Term Length

For Fixed Deposits and Savings Plans products, you can define the period of time that goes from the account opening till the maturity date, when the client can withdraw the money.

To define this period's length, enter the default, minimum and maximum values > click on the dropdown menu > choose the time unit: months, weeks or days.

During the term length no withdrawals can be made unless the user is an administrator or has the Make early withdrawal permission.

 

────────────────────────────────────────────────────────────────────────────── Back to top

Internal Controls

Under this section you can choose to automatically set accounts as Dormant after a number of days, where there has been no financial activity on that account other than posting of interest. Funds can be claimed by the owner or beneficiary at any time even if the account is in a Dormant state.

One advantage of using this option is that it will reduce the risk of incorrect reports and it will help you select the clients that are active in the system but with no activity on their accounts and then decide a course of action.


This option is available for all types of deposit products, however, the system will not set an account to Dormant if it has a maturity date (Fixed deposits and Savings Plan products)

────────────────────────────────────────────────────────────────────────────── Back to top

Product Fees

There are three different types of fees you can setup when creating a deposit product and later apply to deposit accounts. For more details on each type of Fee, please read the article Fees.

 

Arbitrary Fees

These are fees which can be applied manually to the accounts at any point during the loan's lifetime and with any given amount. To activate arbitrary fees you shouldcheck the box.

 

 

Pre-defined Fees

These are also manual fees but for which you already know the amount or percentage to be applied. To set up a predefined fee, click on Add Fee > enter the fee's name > enter the amount.

 

 

Monthly Fees

These fees are automatically applied to the accounts after being setup in the product.

To define monthly fees, click on Add Fee > click on Trigger > Monthly Fee > enter the amount > choose the method for calculating the day when the fee will be applied > Save the Product.

 

 

────────────────────────────────────────────────────────────────────────────── Back to top

 

Accounting Rules

If you want to link your products to accounting, you should enable accounting > select the appropriate GL account for each action.

For more details on the accounting rules, check the article and Product Rules.

 

------------------------------------------------------------------------------ Back to top

 

 
 
support@mambu.com
http://assets3.desk.com/
false
desk
Loading
seconds ago
a minute ago
minutes ago
an hour ago
hours ago
a day ago
days ago
about
false
Invalid characters found
/customer/en/portal/articles/autocomplete