SUBSIDY LINKING THROUGH OLAPS OR OAAC ?
by Sadan-420
(This was published in same Blog Page on 07-08-2018, now shifted as Blog Post)
Subsidy is a benefit given by the government to groups or
individuals usually in the form of a cash payment or tax reduction. But for
bankers, it is directly related to loans where it is received from government
as
assistance to a loan. Thus charging of interest needs to be removed fully on
subsidy portion of that loan. For this reason, subsidy linking to a loan or
cash credit should be done in right way and carefully.
We, the bankers may define subsidy as per following:-
1) Subsidy lying as revolving fund
2) Normal subsidy
3) Back ended subsidy
Let’s look the following table for clear conception.
From the above table, it is clear that OLAPS menu is
required only when bank is trying to open a Term loan account for which back
ended subsidy will be available. And TMPS menu is required for subsidy related
transaction only for the Term Loan account which is opened through OLAPS menu.
NO LINKING IS NECESSARY FOR NORMAL SUBSIDY RELATED ACCOUNT. IMMEDIATE CREDIT TO
LOAN ACCOUNT IS COMPULSORY FOR NORMAL SUBSIDY RELATED ACCOUNTS WHEN SUBSIDY IS
RECEIVED.
Now let’s discuss how to link subsidy with Cash Credit and
Term loan in details.
1) SUBSIDY LINKING WITH
CASH CREDIT ACCOUNT
After getting subsidy from govt.
department, initially it can be kept in SUBSIDY
RESERVE FUND ACCOUNT which is a non-partitioned office a/c (Say for example,
a/c no.0000102416102) of respective branch. Linking of subsidy is happened in
two steps.
1st step:-
The subsidy amount from “SUBSIDY RESERVE FUND A/c” needs to be
transferred to “REVOLVING FUND FOR
SHG/OTHERS A/c” (Say for example, a/c no.0000102416121) through TM menu. At the time of credit in REVOLVING FUND FOR SHG/OTHERS A/c, OPTION-G details should be filled properly
where Entity ID field should be CASH
CREDIT A/C NUMBER repeat CASH CREDIT A/C NUMBER for which the subsidy amount is
received.
(NB:
Care should be taken at the time of providing actual Cash Credit account number
in Entity Id in partitioned details (Option-G) and it may cause to block ABH
for providing wrong a/c number)
2nd step:-
Now the Cash Credit account of
which number is provided in 1st step will have to be modified as
follows: Menu ACM [Enter] >
Function-M > F4 > Put Account ID of Cash Credit > F4 > Put “V” in
Option Code > F4 > F6. The following Screen will appear:
Now put actual Subsidy Amount as entered through TM in
1st step in Free Text 1 and put Subsidy Date in Free Text 2.
(Please note:
Interest adjustment on subsidy part will be taken care of by the system from
the last interest application date or the date provided in “Free Text2” field
whichever is later. Branches have to adjust the interest charged on subsidy
part of those accounts for earlier period manually if any. Normally last
interest application date is the last day of month)
Additional Subsidy or Part Adjustment of subsidy in Cash Credit:
In
some cases, subsidy is received more than one occasion in favour of one
particular account. On the other hand, in case of back ended subsidy, a part of
subsidy may require to be adjusted against an existing account after lock in
period on pro rata basis.
When an
additional subsidy is received in favour of a Cash Credit account, the process
is same as mentioned in 1st step and 2nd step. However,
the amount in Free text1 field under
V option of ACM menu will be the total of subsidy (Previous amount + Additional
amount) allotted against the particular a/c and the Free text2 field will be modified with the current date or the
additional subsidy receiving date.
Similarly, in
case of part adjustment of subsidy to CC a/c the Free text1 field under V option of ACM menu (function M) is to be
suitably modified by the net amount of subsidy, (i.e. earlier amount less
adjustment amount) and the Free text2
field will be the current date.
NB:
If the
amount of subsidy is changed by way of additional amount received or part
adjustment in the middle of a month, (say, on 17th) system will calculate wrong
interest taking care the latest amount in Free
Text 1 field as subsidy for the period from 1st to 17th of
that month.
To take care of the problem Branches will have to run the menu option “CCSUB” on the same date before correction of
subsidy amount.
The following screen will appear
when CCSUB menu is opened:
Just put the
loan account ID against the field “Subsidy Account No” and press F10.
Closure of subsidy
linked cash credit Accounts
a) Run CCSUB Menu: The Branches should run the menu option “CCSUB” for taking care interest
adjustment till date of closure.
b)
Adjust Subsidy amount with Cash
Credit: Before closure of Subsidy-Linked Cash
Credit Account, transfer the amount of subsidy/revolving Fund balance of REVOLVING FUND FOR SHG/OTHERS A/c to
concerned Cash Credit account.
c) Finally Close the Account. Through
CAAC menu Option
List of subsidy
amount of REVOLVING FUND FOR SHG/OTHERS
A/c can be viewed through Menu
“PHINQ”.
2) SUBSIDY LINKING WITH
TERM LOAN ACCOUNT
OLAPS is the main
menu which is used to open a loan account and a linked subsidy account at the
same time. This menu will take us first to OAAC menu for opening the Loan
account. When opening of the loan account is completed, by pressing F3 key, system
itself will open the linked subsidy account.
Following screen will be displayed when OLAPS menu is
invoked.
After filling the details, press key F4. System will take to
OAAC menu field for opening the Loan account. Then all the particulars will
have to be filled step by step as usual what we are doing at the time of
account opening. Before completion of the process, the following picture will
be seen.
After going step by step when you see the above screen,
press key F3. System will open the linked subsidy account itself and below
screen will be displayed with message “Account has been created successfully”.
Now the accounts thus opened needs to be verified by another
user. Same OLAPS menu is used to
verify the accounts.
After filling the fields, press F4 key. This will take user
to OAACAU field for loan account verification. After visiting the required fields
step by step, the following picture will be seen.
After going step by step when you see the above screen,
press key F3. System will take user to
below screen.
When you see the above screen, again press F3. Then system
itself will verify the linked subsidy account and will freeze that account. So finally following screen will be
displayed.
But sometimes, instead of above screen, following screen may
be displayed due to some issue.
In this case, select the record through key SHIFT+F4, and
then press F10 to complete the verification process.
After completion of verification, one loan account with an
account id (Say for example 050077710000026)
and one linked subsidy account (SBA type) with same number with alpha “S” (Say
for example 050077710000026S) will be created.
(In case if User has verified the loan account wrongly
through OAACAU which is opened through OLAPS menu, then the user needs to
verify the linked SBA type account through HOAACVSB menu)
Transferring subsidy amount to linked
subsidy accounts
TMPS menu option
is used for entering transactions into linked subsidy accounts. Following
screen is displayed when TMPS menu option is invoked.
Here, this is to be noted that though the transactions are going to process in linked subsidy account, we have
to specify loan account id only. Tran Type can be ‘C’ or ‘D’ based on the
requirement. After accepting above mentioned details following screen will be
displayed.
Enter the appropriate details. Care should be taken while
entering value date as subsidy will be effective from this date and hence
interest computation will also depend on it. Here source account is the subsidy reserve fund account where subsidy is
parked before it is transferred to linked subsidy account. After accepting
above details, system will create the transaction and following screen will be
displayed.
Now the created transaction needs to
be verified through TMPS menu only.
User will not be able to put further transactions until the
previous transaction is verified. Invoke
TMPS and enter following details and
accept.
Following screen will be displayed.
Press key F4. System will verify the transaction and display
the transaction id created.
Now subsidy amount is credited to the linked subsidy
account (SBA type).
In case if user wants
to debit the subsidy amount from linked SBA type account, then it should be
done through TMPS menu.
Invoke TMPS and enter Tran Type as ‘D’. After pressing key F4 following screen is displayed.
If subsidy account is to close then enter
‘C’(C=Closure) in ‘Close or Adj. Debit’ field else enter ‘D’ (D=Intermediate Debit).
In case ‘D’ is
entered in ‘Close Or Adj. Debit’ field, then user only needs to specify the ‘Subsidy Adj Amt’, as mentioned in
following screen shot.
Here system will debit the linked subsidy account (Say for
example 050077710000026S)by INR 500 (Say for example) and credit the loan
account by INR 500 (Say for example).
After this, user needs to verify this transaction through TMPS only.
In case ‘C’ is
entered in ‘Close Or Adj. Debit’
field, then user needs to specify following fields:
i) Closure
Adj Method: This can be either ‘C
for Complete’ or ‘P for Pro Rata’
based as per closure.
ii) Loan Adj
Amt: Amount what will be credited to loan account.
iii) Subsidy
Refund Amt: Amount what will be returned back to providing govt. department
if any.
iv) Subsidy
Refund Acct: Account where the Subsidy Refund Amount will be credited if
any.
Also ‘Subsidy Adj Amt’
will be populated by the system and this value should be equal to sum of ‘Loan Adj Amt’ and ‘Subsidy refund Amt’.
Following screen will be displayed with the details:
After entering the transaction, same needs to be verified
through TMPS only.
After verification, Loan Adj Amt will be credited to loan
account and Subsidy Refund Amt will be credited to Subsidy Refund Account if
any. Also Linked subsidy account (SBA
type) will get closed.
