Support Center

Loan Accounts' Life Cycle and States

Last Updated: Mar 29, 2018 02:10PM CEST

 

From the moment you create a new loan account in Mambu, the new loan will go through a cycle with different states, each of them with specific implications which are described below.
 

Initial state “Partial Application” or “Pending Approval” depends on the Loan Product settings.

For all the examples below, the underlying assumption is that the roles mentioned (e.g. credit officer) have the right permissions to perform each of the actions.

 

Partial Application

This means that the loan application is missing information and is not yet complete.

As soon as all the documents are collected and the application is complete the loan officer can "Request Approval" which will set the loan account to "Pending Approval" state, so that it can be evaluated.

If at this stage a decision is made not to proceed with the application at all - it can be “Rejected” by the Organisation or “Withdrawn” by the Client.

In this state it is still possible to edit the loan account terms, such as loan amount, interest rate, or number of installments.

 

Accounts Pending Approval

This means that the loan application is under evaluation and can be either:

- Approved

- Rejected (by the Organisation)

- Withdrawn (by the Client)

- Set As Incomplete (if there is still information or documentation missing from the application) - sending the application back to Partial Application state

In this state it is still possible to edit the loan account terms, such as loan amount, interest rate, or number of installments.

 

Rejecting an Application

When an application is “Rejected” the account will be automatically closed and classified in Mambu as "Closed (Rejected)".

They will remain associated to the client or group who requested the loan and all the information that was entered, like comments or notes will remain associated to the account allowing you to keep track of the reasons for the rejection.

This information can be used later, in case the client makes a new request and you want to consider it for the new evaluation process.

It’s possible to “Undo Reject” under “More” options at the closed account level. This will send the application back to the previous state.

 

Withdrawing a Loan Application

If the client chooses to “Withdraw” the loan application, it will be automatically closed in Mambu, and classified as "Closed (Withdrawn)".

It’s possible to “Undo Withdraw” under “More” options at the closed account level. This will send the application back to the previous state.

 

Approved Accounts

Once all the account terms are evaluated and agreed upon, the loan application can be “Approved”.

To approve a loan account, choose "Approve", add any comments you might have and confirm the state.

After being approved, the loan terms such as loan amount, interest rate, or number of installments can’t be changed  anymore.

At this stage, the loan can either be “Disbursed” or can be “Withdrawn” by the client.

It’s possible to “Undo Approve” under “More” option, which will send the application back to the previous state.

 

Disbursing a Loan

As soon as the application is approved, it's ready to be disbursed.

After being disbursed the loan account becomes automatically Active”.

It’s possible to “Undo Disbursement” and send the application back to “Approved” state by choosing the option available under “More”.

 

Active

This is the state of an account immediately after being disbursed.

It will remain in “Active” state as long as the account remains in good standing.

 

Active (in Arrears)

When a loan account has at least one late repayment, Mambu will automatically change its state to "Active in Arrears" until all repayments are made.

The late repayments will then be displayed under each account's repayment schedule.

 

Account sub-state Locked

When there are unexpected events, or a client is having problems repaying a loan, you can “Lock the Account” and suspend Interest, Penalties and Fees to stop being applied on the account.

When the account will be “Unlocked”, the interest, fees and penalties that were accrued during the account locked state, will be applied on the account.

 

All Repayments Made

When the client finishes repaying all the installments, the account can be “Closed” and will be stored under the client's profile as "Closed (all obligations met)".

Mambu will automatically calculate "Completed Loan Cycles" whenever a loan account is closed with "All Obligations Met", i.e. it's fully repaid early.

 

Pay-off

When a client pays the whole amount of the loan earlier, the account should be closed for that client.

To “Pay-off” a loan account choose “Close” and “Pay-off” option.

If part of the outstanding loan amount is not collected, you can choose to write off any remaining balances for interest, fees and penalties.

You can also add any notes you wish to this transaction for audit purposes. These notes will be stored with the history of transactions for this account.

The paid-off loan account will be stored under the client's profile as "Closed (all obligations met)".


Mambu will automatically calculate "Completed Loan Cycles" whenever a loan account is closed with "All Obligations Met", i.e. it's paid-off early.

 

Write-off

When repayments are no longer expected on a loan account that is in arrears, it should be closed and written off.

To “Write off” a loan account choose "Close" and "Write off" option.

You can also add any notes you wish to this transaction for audit purposes. These notes will be stored with the history of transactions for this account.

The written off loan account will be stored under the client's profile as "Closed (Written Off)".

 

Reschedule

If for instance, due to an unexpected event, a client is having problems repaying a loan, you can choose to reschedule the loan, therefore adjusting its terms in order to prevent going into arrears and default.

To “Reschedule” a loan, choose "Close" and "Reschedule" option, add notes about the reasons for rescheduling and confirm the new state.

When you reschedule a loan, the current loan will be closed, its status will change to "Closed (Rescheduled)" and a new one with the new terms will be automatically created with a link to the original account (this is often a requirement in an auditing process).

If the rescheduled account had interest, fees or penalties due, you can choose for these to be either capitalized on the new account principal balance or to be written-off when the new account is created.

 

Refinance

If you decide to top-up a loan account, you can choose to refinance the loan by adding an additional amount to the current balance of the loan.

To “Refinance” a loan, choose “Close” and “Refinance”, add notes about the reasons for refinancing and confirm the new state.

When you refinance a loan the current loan will be closed, its status will change to “Closed (Refinanced)” and a new one with the new terms will be automatically created with a link to the original account.

If the refinanced account had interest, fees or penalties due, you can choose for these to be either capitalized on the new account principal balance or written-off when the new account is created.

 
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