3.J Loan Management System (LMS)

Purpose

Own every cent of every loan across its lifecycle — schedule, accrue, charge, settle, classify, provision, close. The LMS is the system of record for every loan accounting fact; everything else is a query against it.

In-scope features

Loan account creation

Activate on disbursement; mirror sanction terms; one loan per draw for revolving lines.
Loan account number (per RBI / internal scheme).
Reference to application, sanction memo, agreement, mandate.

Repayment schedule

Per product — bullet, EMI, structured.
Per draw for revolving lines.
EMI / instalment computation — flat, reducing, daily-rest, monthly-rest; configurable.
Holiday / moratorium handling.
Step-up / step-down schedules where product supports.

Interest accrual

Daily accrual for performing loans on outstanding principal × applicable rate.
Calendar handling — actual / 365 vs actual / 360 (configurable); leap year handling.
Reset rules for floating rates.
Frozen on NPA — accrual stops; cash-basis recognition only.

Penal charges

Separate ledger from interest (RBI rule — penal charges cannot compound into principal).
Computation per board-approved policy — flat per occurrence, percentage of overdue, capped.
Disclosure in KFS and statements.

Charges and fees

Processing fee — at sanction / disbursement.
Documentation / stamp recovery.
Late payment — separate from penal.
NACH bounce — per bounce.
Foreclosure / prepayment — subject to RBI floating-rate MSME ban.
Servicing / annual fee for revolving lines.
Renewal fee for line renewals.
GST on fees — 18% standard rate, mapped to GL; HSN code maintained.

Repayment processing

NACH presentation — daily batch to sponsor bank.
UPI AutoPay — real-time.
Bank transfer / virtual account — borrower transfers; matched to loan via VA mapping.
Payment gateway — for borrower-initiated payments.
QR / UPI Collect — for ad-hoc collection.
Auto-allocation — order: penal → late fee → other charges → interest → principal (or per loan agreement specification).
Manual allocation for exceptions.
Bounce handling — re-presentation per NACH rules + escalation.

Part payment / prepayment / foreclosure

Part payment — applied per allocation rules; schedule updated.
Prepayment — full or partial; schedule re-computed; foreclosure-charge rule applied.
Foreclosure — full closure; foreclosure charges (where allowed); NOC issued.

Restructuring

Restructuring workflow — per credit policy; downgrades per IRACP.
Observation period tracking.
Post-resolution upgrade subject to performance.

Classification + provisioning

Daily classification — Standard / SMA-0 / 1 / 2 / NPA / Sub-standard / Doubtful / Loss.
Provisioning engine — per IRACP grid; per loan + portfolio totals.
Interest accrual freeze on NPA + reversal of accrued-uncollected.
Upgrade workflow — only on full payment of arrears.

Write-off and recovery

Write-off workflow — board / committee approval; reverses provision against P&L.
Recovery tracking — post-write-off recoveries credited to P&L on cash basis.

Closure + NOC

Closure verification — all dues paid.
NOC generation — borrower-facing letter; bureau updated; CKYC update if needed.
Mandate cancellation — NACH / UPI AutoPay cancelled with sponsor bank.

Accounting + GL

Daily GL postings — per accrual, charge, repayment, write-off, provision.
GL chart-of-accounts mapping — configurable per product.
GST output ledger — per fee invoice.
TDS ledger — where applicable.
Co-lender share posting — segregated per share.

Borrower ledger + statements

Borrower-facing ledger — running balance, transactions.
Statement generation — periodic, on-demand, multi-language.

Co-lending mirror

Two share-level ledgers + one consolidated borrower ledger.
MIS to partner — periodic per agreement.

Out of scope

The collection / dialer / field workflow — see 3.K.
The accounting / finance closure / financial reporting — see 3.M.
Regulatory reporting — see 3.N.

Key entities

LoanAccount — per loan / per draw for revolving.
Schedule — repayment schedule per loan.
ScheduleLine — per due date.
InterestAccrual — daily ledger entry.
Charge — per charge event.
Repayment — per receipt.
Allocation — per repayment, breakdown across components.
Classification — daily snapshot per loan.
Provision — daily snapshot per loan.
Restructuring — per event.
WriteOff — per event.
GlPosting — accounting entry.
Statement — generated artefact.
LenderShare — for co-lent, the per-lender slice.

Key workflows

Loan activation on disbursement.
Daily accrual run.
Daily classification + provisioning run.
Daily NACH presentation file generation.
Bounce file processing (next day).
Repayment allocation on each receipt.
Restructuring workflow with downgrade.
Write-off workflow with approvals.
Closure workflow + NOC.
Co-lending settlement per period.

Integrations

Sponsor bank for NACH presentation, bounce files, account statements.
NPCI rails for UPI AutoPay.
Payment gateways for borrower-initiated payments.
Accounting system (or own GL) — daily postings.
GST portal — invoice generation for fees.
CIC for monthly classification submission (in coordination with 3.N).
Partner lender for share-level reporting.

APIs

POST /loans — create loan on activation.
GET /loans/{id} — read.
GET /loans/{id}/schedule.
POST /loans/{id}/repayments — record a repayment.
POST /loans/{id}/charges — apply a charge.
POST /loans/{id}/prepayment — prepay.
POST /loans/{id}/foreclose.
POST /loans/{id}/restructure.
POST /loans/{id}/writeoff.
POST /loans/{id}/close.
GET /loans/{id}/statement.
GET /loans/{id}/classification.

Events emitted

loan.activated
accrual.posted
repayment.received / repayment.allocated
bounce.received
classification.changed (SMA / NPA transitions are loud)
provision.computed
restructure.applied
writeoff.applied
loan.closed
statement.generated
lender_share.posted

Edge cases

Bank holiday / weekend due date — push to next working day or treat as overdue per policy.
Partial NACH success — partial credit only; remaining marked as bounce.
Repayment received before due — applied as advance per policy.
Multiple bounces in NACH cycle — re-presentation cap per NACH rules.
Schedule change after restructuring — old schedule retained for audit; new schedule active.
GST rate change — apply prospectively; invoices versioned.
Co-lent loan with one lender’s share zero (after assignment) — degenerate co-lending; treat as own-book.
Loan with overdue and prepayment received same day — allocation order matters; per loan-agreement waterfall.
Daily classification crossing month-end — daily; monthly reporting derived from daily.

Compliance touchpoints

IRACP norms — daily classification; upgrade only on full clearance.
Penal Charges circular — separate ledger.
RBI Foreclosure Charges — banned for floating-rate MSME term loans.
GST law — invoices, ITC, return filing.
Bureau reporting — monthly classification submission.
Co-Lending Guidelines — share-level segregation and lockstep.

MVP vs production

Feature	MVP	Production
Loan account + schedule	✓	✓
Bullet / EMI products	✓	✓
Revolving lines	✓	✓
Daily accrual	✓	✓
Daily classification	✓	✓
Provisioning	✓	✓
NACH cycle (with bounce + re-present)	✓	✓
UPI AutoPay	(Phase 2)	✓
Restructuring	✓ (manual workflow)	✓ (automated with approvals)
Write-off	✓ (manual)	✓
Co-lender share ledger	✓ (when first partner live)	✓
GST invoice automation	✓	✓
Statement on demand	✓	✓