13.10 LMS

Epic overview

The LMS is the system of record for every loan event in the platform. Every cent moves through it. Daily classification, daily accrual, lockstep co-lending updates, IRACP-compliant provisioning, and audit-grade event sourcing are non-negotiable.

This module is also the most-regulated in terms of accounting and prudential treatment. Penal charges must be separately ledgered (per RBI Aug 2023 circular); restructuring must downgrade per IRACP; upgrade only on full clearance per Nov 2021 circular.

User stories

1. As an ops user, I want daily classification and provisioning to run automatically end-of-day and finish by 02:00 IST.
2. As a borrower, I want a clear statement showing principal, interest accrued, charges, dues — with no double-counting of any line.
3. As a borrower making a repayment, I want my payment to apply per the disclosed waterfall (penal → fees → interest → principal) without surprises.
4. As an auditor, I want every loan event traceable: when it was posted, by whom, what changed, what the new state is.
5. As a credit head, I want SMA bucket transitions (SMA-0 → SMA-1 → SMA-2 → NPA) reflected daily and surfaced for triage.
6. As a CRO, I want NPA classification to upgrade ONLY on full clearance of arrears — partial payments must not upgrade.
7. As a finance officer, I want monthly close to be possible by day 5 of the next month with all accruals, provisions, charges posted.
8. As an ops user, I want to apply a charge (bounce, late, penal) per the board-approved policy, with the borrower notified.
9. As a co-lender, I want my share’s outstanding, accrual, repayments, and classification to mirror perfectly on daily MIS.
10. As a borrower seeking foreclosure on a floating-rate MSME loan, I want zero foreclosure charge per RBI 2014 rule.
11. As a borrower with an EMI on a non-floating product, I want pre-disclosed foreclosure charges applied transparently.
12. As an analyst restructuring a loan per approved policy, I want the workflow to downgrade per IRACP and start an observation period.
13. As a system, I want to freeze interest accrual immediately when a loan turns NPA and reverse any accrued-but-uncollected interest from the prior period.
14. As a finance officer, I want every charge to generate a GST invoice in the right state’s tax form (CGST + SGST vs IGST).
15. As an admin, I want the board-approved penal-charges configuration to apply across all loans, versioned, audit-trailed.

API requirements

Loan account

• POST /v1/loans — create on disbursement.
• GET /v1/loans/{id} — read with current state.
• GET /v1/loans/{id}/events?from={t}&to={t} — event history.
• GET /v1/loans/{id}/schedule — current schedule.

Drawdowns (for revolving lines)

• POST /v1/loans/{id}/draws — create new drawdown. Body: { amount, tenure }.
• GET /v1/loans/{id}/draws — list.
• GET /v1/loans/{id}/draws/{draw_id}/schedule — per-draw schedule.

Repayment

• POST /v1/loans/{id}/repayments — record repayment (internal; from NACH adapter or PG webhook). Body: { amount, source, source_ref, received_at }.
• GET /v1/loans/{id}/repayments?from={t} — list.
• POST /v1/loans/{id}/repayments/{rid}/re-allocate — manual re-allocation (rare; with audit).

Charges

• POST /v1/loans/{id}/charges — apply charge. Body: { type, amount, reason }.
• GET /v1/loans/{id}/charges — list.
• POST /v1/loans/{id}/charges/{cid}/waive — waive with approval.

Prepayment / Foreclosure

• POST /v1/loans/{id}/prepayment — partial prepayment.
• POST /v1/loans/{id}/foreclose — full closure pre-tenure. Returns { closed_at, noc_uri, foreclosure_charge }.

Restructure

• POST /v1/loans/{id}/restructure — initiate. Body: { reason, proposed_terms }. Returns { workflow_id }.

Write-off

• POST /v1/loans/{id}/writeoff — approve write-off. Body: { approver_id, reason }.
• POST /v1/loans/{id}/writeoff/recovery — record post-write-off recovery.

Classification + provisioning

• Cron: daily classification job.
• GET /v1/loans/{id}/classification — current.
• GET /v1/loans/{id}/classification-history — daily snapshots.
• GET /v1/loans/{id}/provision — current.

Closure

• POST /v1/loans/{id}/close — final closure (after foreclosure or full schedule).
• GET /v1/loans/{id}/noc — NOC retrieval.

Statement

• GET /v1/loans/{id}/statement?from={t}&to={t} — statement; format query param for pdf / json.

Co-lending mirror

• GET /v1/loans/{id}/lender-shares — per-lender share data.

GST invoice

• POST /v1/gst-invoices — auto-generated by charge events.
• GET /v1/gst-invoices/{id}.

Data model

• loan_account, loan_event (append-only), schedule_line, repayment, allocation, charge, classification_snapshot, provision, restructuring, writeoff, loan_allocation (co-lending), gst_invoice.

See 5.9 Schema reference.

UI screens

Ops

• Loan dashboard with classification distribution.
• Exception queue (failed accrual, recon issues, restructure pending).
• Daily batch run status.

Borrower

• Account view (outstanding, last EMI, next due).
• Statement download.
• Repayment via PG / UPI link.
• Repayment history.

Analyst

• Per-loan view with full event history, schedule, classification timeline.

Finance

• Monthly close dashboard.
• Provisioning schedule.
• Charges register.
• GST output reconciliation.

Backend services

• LMS core — owns loan_account, loan_event, schedule_line.
• Accrual engine — daily.
• Classification engine — daily IRACP.
• Provisioning engine — daily.
• Repayment processor — allocates per waterfall.
• Restructure workflow — long-running.
• Charge service — applies charges per board policy.
• GST invoice service — generates invoices.
• Co-lending mirror — keeps share-level ledger consistent.

External integrations

• Sponsor bank for NACH presentation + bounce files + statements.
• NPCI rails for UPI AutoPay.
• Payment gateways for borrower-initiated payments.
• Internal accounting / GL for daily postings.
• GST portal via GSP for invoice filing.
• Bureau for monthly classification submission (via reporting module).
• Partner systems for co-lending MIS.

Test cases

Happy path

• Schedule generation correct for bullet (WC line draw), EMI (term), structured.
• Daily accrual computes correctly on weekends and bank holidays.
• Bounce processed; bounce fee applied to charges ledger (not principal).
• Repayment allocation per waterfall: penal → fees → interest → principal.
• Restructure downgrades per IRACP.
• Upgrade requires full payment of arrears (not just current EMI).
• Foreclosure of floating-rate MSME term loan applies zero foreclosure charge.
• Foreclosure of fixed-rate non-MSME applies charge per disclosed policy.
• Co-lending mirror shows identical classification across both lenders.

Failure / edge

• Repayment received before due date → applied as advance per policy.
• Partial NACH success → partial credit; remaining is bounce.
• Multiple bounces in NACH cycle → re-presentation per NACH rules; cap respected.
• Schedule change after restructuring → old schedule preserved for audit; new schedule active.
• Daily classification crossing month-end — daily snapshots used for monthly aggregates.
• GST rate change mid-loan → apply prospectively; invoice versioned.
• Multi-state operations → invoice in right tax mode (CGST+SGST vs IGST).
• Backdated correction to a loan → adjustment journal with explanation; prevent silent retroactive change.

Compliance

• Penal charges in separate ledger from interest (Aug 2023 compliance).
• No capitalisation of penal charges into principal.
• Upgrade only on full clearance (Nov 2021 compliance).
• Restructure triggers downgrade immediately if previously standard.
• Co-lending lockstep classification verified.

Edge cases

• Borrower with multiple loans, one delinquent — borrower-level view influences case priority; classification may cascade per policy.
• Restructured loan re-restructured — fresh stress event; full downgrade.
• Loan with overdue AND prepayment received same day — allocation order per agreement.
• Fraud-classified loan — 100% provisioning; no upgrade; reported to RBI.
• Settled-less-than-full disposition — recorded; bureau updated; no upgrade.
• Partial write-off — remaining principal continues to accrue.
• NACH ack arrives late (delayed by sponsor bank) — repayment timestamp is processing-effective date, not ack date, for classification purposes.
• Co-lending pool exit mid-cycle — buyback or substitution per agreement.

Acceptance criteria

• Daily classification + provisioning runs end-to-end by 02:00 IST for the entire book.
• Schedule + accrual mathematically auditable (unit tests against worked examples).
• Penal charges in separate GL (Aug 2023 compliance verified).
• Upgrade-on-full-clearance enforced (cannot bypass).
• Co-lending share segregation verified (originator vs partner share totals match per-loan).
• Statement on-demand within 5 seconds.
• Monthly close support — all postings complete by day 5 of next month.
• GST invoices generated for every chargeable event.

Compliance touchpoints

• IRACP norms — daily classification, upgrade discipline, restructure treatment.
• Penal Charges circular (Aug 2023) — separate ledger.
• RBI Foreclosure circular (2014) — no foreclosure charge on floating-rate MSME.
• GST law — invoices, ITC, return filing.
• Bureau reporting — monthly classification submission.
• Co-Lending guidelines — share-level segregation, lockstep classification.

Related

• 3.J LMS module.
• 2.10 Asset classification, NPA, provisioning.
• 2.10.1 IRACP edge cases.
• 2.11.1 Penal charges examples.
• 5.8 Sequence diagrams — repayment + classification flows.
• 5.11 Worked data example — LMS rows for one loan.