fineract-doc/src/docs/en/chapters/features/backdated-interest-modification.adoc

= Backdated interest modification

In the previous implementation we were only allowing the interest rate modification from current date and from now on we will allow Interest modification backdated on progressive loans as well.

[IMPORTANT]
====
Only available on progressive loans.
====

== Functionality
Validations updated to allow backdated interest change, even on charged-off or otherwise closed loan. Making progressive loans more flexible.

1. Interest rate can be modified from backdate any date from first disbursement date

2. Interest will be affected from the applied date itself.

3. Backdate can be done on already paid Installments as well

4. Repayment schedule will be recalculated with New EMI and Interest from the Interest applied schedule date

- Backdated PAID Installments and Unpaid/Partial Paid Installment EMI would be changed as per the new calculated EMI

5. Installments paid Interest amount will be reverse replayed as per the new Interest rate from the applied date

- Transactions will be reversed replayed if there is any change is allocations

- Accrual adjustments will be done during reverse replay (during the COB process)

6. No of Installments will remain the same, only EMI and Interest would get affected

7. Backdated Interest modification allowed on the loan that is charged off
- If the repayment that was made before the charge-off is reversed and replayed due to backdated Interest modification,then the accounting entry of the reversed transaction and replayed transaction should follow standard accounting rules and not charge-off accounting rules

8. Backdated interest modification allowed on the loan that is overpaid, and CBR is complete.
- Any action that triggers the recalculation (ex: reversal of backdated transaction) on the CBR loan will result in treating CBR as a credit transaction during reverse-replay. Same logic to be applied if the backdated interest modification is allowed on CBR loan accounts.

9. Asset transfer (externalization)
- If the repayment that was made before the asset owner change got reversed and replayed due to backdated Interest modification,
then, the accounting entry for the reversed transaction and replayed transaction include the tag of the current asset owner

10. Since backdated Interest modification is allowed on CBR/overpaid loans, we can keep the modification open on closed loans as well

- system will do the chronological reverse-replay when the backdated Interest is changed on closed loans, schedule and transaction will be allocated accordingly


== API endpoints
=== Create reschedule loans request (create reschedule)

* *Endpoint*: `/rescheduleloans`
* *Method*: `POST`

.Example interest rate change request
[source,json]
----
{
    "loanId": 1,                        // Mandatory
    "newInterestRate": 1,               // Mandatory for interest rate change type reschedule
    "rescheduleFromDate": "2024-01-01", // Mandatory
    "rescheduleReasonId": 54,           // Mandatory
    "submittedOnDate": "2024-01-01",    // Mandatory
    "dateFormat": "yyyy-MM-dd",         // Mandatory
    "locale": "en"                      // Mandatory
}
----

.Example interest rate change response
[source,json]
----
{
    "resourceId": 1,
    "loanId": 1,
    "clientId": 1,
    "officeId": 1
}
----

=== Update reschedule loans request (approve reschedule)

* *Endpoint*: `/rescheduleloans/<reschedule_Id>`
* *Method*: `POST`

.Example reschedule approve request
[source,json]
----
{
    "approvedOnDate": "2024-01-01",     // Mandatory for approval
    "submittedOnDate": "2024-01-01",    // Mandatory
    "dateFormat": "yyyy-MM-dd",         // Mandatory
    "locale": "en"                      // Mandatory
}
----

.Example reschedule approve response
[source,json]
----
{
  "changes": {
    "approvedByUserId": 1,
    "approvedOnDate": "2024-01-01",
    "dateFormat": "yyyy-MM-dd",
    "locale": "en"
  },
  "clientId": 186,
  "loanId": 188,
  "officeId": 1,
  "resourceId": 35
}
----