Products & System Settings Module

The Settings module (/settings) governs institutional credit policy, product definitions, floating interest rate charts, holiday calendars, and organization-wide risk constraints. It empowers administrators to launch new credit lines, fine-tune lending algorithms, and configure regulatory compliance rules.

1. Key Definitions & Operational Parameters

Parameter	Explanation
Loan Product	A standardized credit offering defining the interest rate, amortization method, tenor limits, fees, and collateral rules.
Flat Interest Method	Interest is calculated solely on the original principal amount for the entire duration, remaining constant across all installments.
Declining Balance Method (Reducing)	Interest is calculated strictly on the remaining unpaid principal balance at each cycle. As principal is repaid, interest charges decrease.
Floating / Variable Rate	An interest rate pegged to an external economic benchmark (e.g., Central Bank Rate + 4%), adjusting automatically when the benchmark moves.
Grace Period (Principal)	A window at the beginning of the loan where the borrower pays only interest and fees, delaying principal repayment.
Grace Period (Moratorium)	A temporary total repayment holiday where neither principal nor interest is charged.
Non-Working Day Adjustment	Automatic rescheduling rules shifting installment due dates forward to the next business day if they land on a Sunday or official public holiday.
Authority Matrix	Institutional rules mapping loan amount thresholds to required committee approval stages (Officer, Manager, Director).

2. Configuring Loan Products (`/products/create/page.js`)

Launching or updating a credit product is governed by a 5-step guided rail:

┌─────────────────────────────────────────────────────────────────────────────────────────────────┐
│ Create Loan Product                                                  Step 2 of 5: Interest      │
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ (1) Basics ──────► (2) Interest ──────► (3) Charges ──────► (4) Rules ──────► (5) Review & Launch│
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ Product Name: [ Biashara SME Growth ]                    Product Code: [ PRD-SME ]              │
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ Interest Calculation Method:                                                                    │
│ (•) Declining Balance (Equal Installments - PMT)                                                │
│ ( ) Flat Rate (Simple interest on initial principal)                                            │
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ Rate Structure:                                                                                 │
│ Nominal Annual Rate: [ 18.0% APR ]                       Rate Type: [ Fixed ▼ ]                 │
│ Repayment Frequency: [ Monthly ▼ ]                       Tenor Limits: [ 6 ] to [ 36 ] Months   │
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ Grace Periods:                                                                                  │
│ Principal Grace: [ 1 ] Installments (Interest-only)      Interest Grace: [ 0 ] Installments     │
├─────────────────────────────────────────────────────────────────────────────────────────────────┤
│ [ Back to Basics ]                                                        [ Continue to Charges ]│
└─────────────────────────────────────────────────────────────────────────────────────────────────┘

The 5-Step Product Rail:

Step 1: Basics

Product Name & Code: Public title and short system identifier (e.g., PRD-EMG, PRD-SME).
Target Market Description: Operational guidelines for field officers explaining who qualifies.
Status: Active (available for new applications) or Archived (existing loans run off, no new originations).

Step 2: Interest Engine

Method: Choose between Declining Balance (Amortized) or Flat Rate.
Frequency: Choose repayment rhythm: Daily, Weekly, Bi-weekly, Monthly, Quarterly, or Once at Maturity (Bullet).
Rate Type: Fixed or Floating (indexed to a published Rate Chart).
Grace Windows: Configure interest-only or payment moratorium installments.

Step 3: Charges & Late Penalties

Upfront Origination Fee: Percentage of principal (e.g., 2.0%) or flat amount (e.g., KES 1,000) deducted upon disbursement.
Credit Life Insurance: Mandatory insurance premium deducted to cover death/disability risk.
Late Repayment Penalty: Daily penalty rate (e.g., 0.1% per day) applied to overdue installments.
Penalty Grace Days: Number of buffer days (typically 3 days) before late fees start biting.

Step 4: Policy Constraints & Rules

Principal Ceilings: Minimum amount (e.g., KES 100,000) and Maximum amount (e.g., KES 2,500,000).
Mandatory Collateral Threshold: Require verified collateral if principal exceeds a set figure (e.g., KES 200,000).
Minimum Required Documents: Force upload of at least 2 or 3 supporting items (e.g., bank statement, ID, permit).
Branch Scope: Limit product availability to specific branches or roll out institution-wide.

Step 5: Review & Launch Simulator

Built-in loan schedule simulator: test the product with dummy values (e.g., KES 500,000 for 12 months).
Review exact installment amounts, total interest yield, and APR.
Click Launch Product to make it instantly available in all branch origination menus.

3. Floating Interest Rate Charts (`/rates`)

For commercial or variable-rate credit indexed against external macroeconomic benchmarks:

Open Settings $\to$ Rate Charts (/rates).
Create or select a benchmark index (e.g., Central Bank Base Lending Rate - CBR).
Record benchmark changes when announced by the monetary authority (e.g., CBR raised from 12.5% to 13.0%).
Specify the Effective Date:
- The platform calculates the new interest rate for all linked floating-rate facilities.
- Installment schedules automatically recalibrate starting from the next scheduled billing cycle.
- Borrowers receive automated SMS alerts detailing their adjusted installment figures.

4. Organization Operational Policies

Institutional policies govern global system behavior across all branches:

1. Holiday & Non-Working Day Calendar (`/settings/calendar`)

Pre-loaded with official national public holidays and weekend non-banking days.
Shift Rule: When an installment falls due on a non-working day, administrators can configure whether the due date rolls Forward to Next Business Day (recommended) or Backward to Previous Business Day.

2. Allocation Waterfall Hierarchy (`/settings/waterfall`)

Configures how incoming funds are legally split. Default institutional standard:
1. Overdue Penalties & Fines
2. Administrative, Legal & Processing Fees
3. Accrued Interest
4. Outstanding Principal Balance

3. Non-Performing Asset (NPA) Classification Threshold

Default set to 90 Days Past Due (DPD).
Once a loan crosses 90 DPD:
- System automatically reclassifies facility as Non-Performing.
- Freezes automatic interest accruals to comply with Central Bank prudential guidelines.
- Flags account for Credit Committee repossession or recovery action.

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