• Savings account creation
• General Features of Savings Accounts
• Savings Account Creation
• Savings Record Fields
• Savings Status
• Savings Product Restrictions
• Savings Account Details
• Account Balance Details
• Deposits due
• Account Activity
• Change Logs
• Status History
• Performance History
• Savings Account Transactions
• Deposits / Withdrawals 
• Adjustments
• Transaction History
• Interest calculation
• Auto creation of savings accounts
• Out of Scope for Version 1.0

Savings account creation

General Features of Savings Accounts

Savings accounts can be created for an active product instances in the system. These savings accounts inherit the rules and defaults from the product definition. This section details out the sub features of savings accounts.

• Savings Accounts can be created for either an individual or a group or a center depending on whether the product instance is defined for clients, groups or centers.
• Accounts can be of two types: Mandatory and Voluntary. The difference between the two type’s lies in the way “Recommended/Mandatory amount for deposits” is treated by the system (See Attributes table)
• A single account cannot be given to multiple centers, groups or clients.
• A center, group or client can have multiple accounts of the same or different product instances.
• Individual client accounts cannot be converted to a group account. Similarly conversion of center/group accounts will not be permitted.
• Accounts cannot be deleted.

Savings Account Creation

• A savings account can be created for all product instances, which are in the “Active” status.
• A new savings account can be created only for “Approved” clients and groups and “Active” centers.
• There are no restrictions on the number of savings account that a client/group/center can be part of. Any restrictions will be a part of offline approval processes of the concerned MFI.

The following attributes will be displayed as Read Only information in the Accounts page:

• The product details inherited from instance definition that cannot be overwritten at the account level
• The range of allowed amounts/rates for the instances
• Other attributes, like default amount/rate, can be overwritten at account level

Savings Record Fields

In additions to the attributes inherited from savings product definition, following are the attributes for savings account. Note: The attributes which are defined at product definition level, but can be modified at account level, have been repeated here.

Attributes for savings record creation

 Mandatory/recommended savings amount

• This amount will be considered “due” at every meeting day of the account owner.
• In Mandatory accounts- If a deposit is not received as expected on a meeting day, the same should be added in the due amount for next meeting day. That is, account owner will owe double the amount at the next meeting day.
• For Voluntary accounts- If a deposit is not received as expected on a meeting day, it will not be added in the due amount for next meeting day.
• Partial payments will be allowed for both options.
• For center savings accounts, this amount will be applied to all clients in “Active” or “On hold” states.
• For group savings account, where the amount applies to “per group member”, amount will be applied to clients in “Active” or “On hold” states.

Savings Status

When an account is initiated, it has to go through the various states as depicted in the state flow diagram and certain offline processes specific to the concerned MFI will follow, before a savings account is approved and withdrawals are allowed.

Figure 1: Status Flow Diagram- Savings Account Creation

Table 2: Status Description for Savings Accounts

Savings Product Restrictions

These are defined at product level.

• Minimum balance for interest:
  Minimum amount required in the account for it to earn interest
• Group/Center Savings Account:
  By default, all members of the group/center are part of all the savings account of the group. These members will be allowed to deposit and withdraw from the group/center savings account. When a transaction (deposit/withdrawal) is made, user will need to specify the client name from a list of “Approved” clients belonging to the group/center. The deposits/withdrawals can also be made by a “non-specified” entity.

Savings Account Details

Once an account is created, various operations like viewing of account information, editing, and modifying will be facilitated through the Account Details page. The user will be allowed to edit this information based on permissions and the status of the account.

In addition, a Savings Account Details page will have the following sections:

Account Balance Details

This section will contain the summary of the account balance. Account Balance- Balance in the account updated till last transaction/interest posted. This should take into account the following:

• Deposits – This should also consider adjustments.
• Withdrawals –This should also consider adjustments.
• Interest earned – This should also consider adjustments.
• Adjustment if any
• Account balance= Deposits – Withdrawals + Interest Earned

Note : In partial and pending states, account balance details shouldn’t be displayed in the GUI.

Deposits due

This section will have the details for the deposit due on the next meeting date. The details included in this section are:

• Original deposit- amount scheduled to be paid on the next meeting date
• Past deposit due- amount overdue from past meetings with the break up of amount for each meeting date
• Total amount due on the next meeting with the next meeting date
• The original deposit can be waived
• The total overdue amount can be waived

UI Notes:

• The total amount due on next meeting date and the meeting date will be displayed on the savings details page. Breakup will be displayed on a separate page.
• For voluntary accounts, the breakup of deposits due will not be available- that is, the “view deposits due” link and page will not be present.
• The UI will be similar to: (See Mock-up)

Account Activity

The following activities will be logged in this section:

• Amount withdrawn from the account
• Deposit made to the account
• Adjustments- made to the account

Note – Charging of mandatory/recommended amount is not logged as an activity

The details recorded are:

• Date- Date of transaction
• Activity – which could be one of the following:
• Withdrawal
• Deposit
• Interest posted to the account
• Adjustment– Correction on a particular transaction, Account balance, Interest posted
• Amount
• Running balance – Total balance updated after each activity

Notes on UI-

• Recent Activity – The last three recent activities will be displayed on the savings details page. Complete account activity will be shown in a separate page.
• In partial, pending and cancelled states, “Recent activity” section will not be displayed. The “View all account activity” link should be visible after the first activity is logged.

Change Logs

The following information will be available in the change logs:

• Account information changes
• Waiving of voluntary or mandatory deposits – In this case, “Old value” in change log will be the amount that is waived and the “new value” will be zero

• Note: However, the change logs will not have details of all the transactions made. The following details are not logged in the change logs:
  • Deposits made
  • Withdrawals
  • Adjustments made
• Refer Change log for details.

Status History

Refer to Status history for details

Performance History

The following parameters will be used to track the performance of each savings account by the system:

Savings Account Transactions

After an account is in “Approved” status, transactions can be made to the account. These transactions include the following:

• Deposits
• Withdrawals
• Adjustments
• Interest posting

Note: The transactions entries listed in this section are not included in the Change Logs. Each one of the transaction entries are made against the correct GL Code picked from the chart of accounts defined for that HO. The details on transaction entries in the database are part of the design document.

Deposits / Withdrawals

• Mandatory Accounts
  • There will be a deposits due section, which will have the “mandatory deposit amount” due on next meeting, and "mandatory deposit amount" not paid in past meetings
  • User can waive the next deposit amount due
  • User can waive all the past amounts together (if the amount hasn't been paid for last 10 installments, sum of amounts due in all installments can be waived together and not separately).
  • When an amount is deposited, it can be less/equal or greater than the "mandatory deposit amount"
  • If the amount is less than the mandatory deposit amount, the balance (due but not paid) will be displayed in "past amount due" section.
  • If an amount greater than the "mandatory deposit account" is deposited, it will not be adjusted in the next deposit due.
  • If partial payment is made, Mifos system should apply the amount against the oldest mandatory payment first.
  • “Mandatory amount” for mandatory accounts will be displayed in the collection sheet and bulk entry.
• Voluntary Accounts-
  • Amounts cannot be waived.
  • Deposits due section will not be present and missed deposits will not be tracked or displayed 
• “Recommended amount” for voluntary accounts will be displayed in the collection sheet and bulk entry.
• Group savings account- All clients belonging to the group will be allowed to withdraw from the account.
• Center savings account- All clients belonging to the center will be allowed to withdraw from the account.

The following information should be captured when a deposit/withdrawal is made:

• Type of transaction: (Deposit/Withdrawal)
• Amount
• Date of transaction
• Mode of payment
• Client name- List of all the clients of the group/center and one “non-specified” option. Clients in Approved and On Hold states should be listed. [NOTE: the current code doesn't display a list of clients on the Group Deposit Page]
• Receipt ID
• Receipt date

The following information will be recorded by the system:

• Date transaction was recorded in system
• Recorded by (username)

User will be asked to “Preview” the entries before saving the same. Basic Error checking as per the Attributes Table has to be done before the record is previewed and saved.

The following actions will be taken once the entries have been made:

• Record transaction with data listed above
• Update savings account balance
• Update “Account balance”

Note : The system will know that it was a withdrawal or a reduction of interest earned (if an adjustment was made for example), however, the current account balance will be shown as one value (sum of all debits minus all credits).

• For mandatory group savings accounts, if the mandatory deposits are specified as “per group member”, then deposits made against “non-specified” should not reduce the amounts to be deposited by each group member. This is applicable to all center savings accounts as well.

Adjustments

To rectify errors/mismatches, adjustments will be supported by the system. Following are the types of adjustments:

Adjustment- Correction Entry
Correction to the last amount paid can be made. The account balance should be updated. For the correction entry, system should make an entry to reverse the last financial entry (withdrawal/deposit) and also make a fresh entry for the new deposit.

• Mandatory accounts- The user will be allowed to modify or nullify the amount last paid.
  • If the last transaction was a deposit, which is nullified/decreased, system should ensure that the account balance does not become negative if this transaction is accepted. If the transaction is accepted, system should decrease the account balance. But if the amount is increased, account balance should be increased. A negative amount cannot be entered.
  • If the last transaction was a withdrawal, and it is nullified or decreased, system should update the account balance accordingly. But if the amount is increased, system should ensure that the withdrawal is not greater than the account balance. A negative amount cannot be entered.
  • The corresponding financial transactions entries (DR/CR) should be made.
• Voluntary accounts- The user will be allowed to modify or nullify the amount last paid.
  • The amount can be nullified/decreased or increased.
  • If the last transaction was a deposit, and it is nullified/decreased or increased, system should update the account balance accordingly
  • If the last transaction was a withdrawal, and it is nullified or decreased, system should update the account balance accordingly. But if the amount is increased, system should ensure that the withdrawal is not greater than the account balance
• For group/center savings accounts, if the last transaction is nullified, it should be adjusted against the client who made the transaction.
• Deposits/withdrawals done from bulk entry- For center savings accounts, there can be multiple deposits and/or withdrawals. For adjustments, the system will pick the amount under   "non-specified" option of center account as the last transaction. In case this is empty, system will pick the transaction made by last client and allow adjustment on the same. Similar rule will apply to group savings accounts.

For other types of adjustments, refer to Savings Adjustments

Transaction History

This section will record all amounts that were deducted or added to the account.

The details recorded are:

• Date of transaction – For deposits/withdrawals and payments, this will be the user-entered date of transaction.
• Transaction ID – ID generated by the system for each transaction
• Type – Type of transaction which can be one of the following
  • Deposit
  • Withdrawal
  • Interest
  • Adjustment
• GL Code – GL Code against which this has been recorded.
• Debit
• Credit (note that it will be either debit or credit per transaction)
• Balance – System will update the account balance after every transaction and the same will be displayed in transaction history.
• Date Posted – Recorded by the system and displayed
• Posted By – username of the user recorded by the system and displayed
• Client name – for groups and center accounts

Interest calculation

• Interest should be calculated and posted to the accounts as per the frequency specified in the product instance. Start date for interest calculation and posting will be the start of the fiscal year.
• Reference for time period will be the start of fiscal year for all product instances.
• Interest should be posted on the last day of the month for all the accounts (as per “Frequency for interest posting to accounts”).

Interest Rate Formulae

P = principal amount (initial amount)

r = annual rate of interest (as a decimal)

A = amount of money accumulated including interest

n = number of times the interest is compounded per year

Periodic intervals: daily, monthly, quarterly, semiannually, or annually

Compound Interest

Definition: Interest earned on an investment at periodic intervals and added to the original amount of the investment. Future interest payments are then calculated and paid at the original rate but on the increased total of the investment. This is interest paid on interest.

Formulae

For one period interest calculation: A = P(1+r/n)

For a year or more: A = P(1+r/n)^n(t), where t= number of years.

Examples:

• P=1500, r=4.3/100, n=4, t=6
• One period compound interest calculation:
  • 1500(1+0.043/4) = 1516.125
• Six years compound interest calculation:
• 1500(1.043/4)^4(6) = 1938.84

Auto creation of savings accounts

Background
All Clients who join GK have mandatory deposits to be made in the weekly meetings. Hence savings accounts have to be opened for every client when making them active in Mifos. Currently, in Mifos we have to create a client and approve them and then create and attach a savings account to the client manually through a open savings account screen. This request is to speed up and automate the savings account creations process for newly joined clients.

Feature summary
Require an additional section called “Create savings accounts” in the “Create new clients - Enter MFI Information” screen. The user must be able to choose atleast 3 savings accounts in this section from existings savings products for automated creation of these accounts with default values set during product definition when the status of this client changes to active.

This feature would help MFIs to create and attach savings accounts to clients during the client creation process itself.

Business need for feature

To decrease Mifos usage and internet usage time. Also avoid missing of savings account creation for clients before printing collection sheet. 

Primary Flow

• User: brings up the “create new client” screen.
• User: Enters client personal information and clicks “continue”.
• System: brings up the Enter MFI information screen.
• In the “Create savings accounts” section. User selects up to 3 savings accounts to be created for the client and clicks preview.
• System: Brings up the Review and submit page.
• User: clicks submit for approval button.
• System: brings up client information screen.
• User: clicks on “Edit Member status” link.
• System: brings up “Change Status” screen.
• User: selects the “active” status radio button and enters notes and clicks preview button.
• System: brings up confirm status change page.
• User clicks submit
• System: creates and attaches the chosen savings account to the client and sets the accounts to active state (in a manner equivalent to opening 3 savings accounts for the client and changing each account’s state to active.)
• System: brings up the client account information screen [The savings accounts created for the clients will be displayed in the savings section blue box [all active accounts are displayed in this box.]
• WHERE FEATURE IS LOCATED INSIDE OF MIFOS AND HOW IS IT ACCESSED:
• This feature requires a visiual change i.e., a new section to be created in the “create new client – Enter MFI information” page and a non visual functional change in the functionality of the submit button on the “Change Status” page for clients.
• IF FEATURE IS “ATTACHED” TO A MIFOS ENTITY THAT HAS STATES (ie, centers, groups, clients, accounts, etc):
• When a client is changed into “Active” Status, this feature is requesting that a savings account to be created in pending approval status and moved into active status at the same instant with “default creation” as notes for the change of status.

 Additional information

• The feature inherits the permissions controls of client creation and client approval for a user respectively. During automated savings account creations it creates a change of state log with a note taking a value default as listed before.
• This pipeline should only be displayed during the create-a-client pipeline. Not needed for groups or centers.
• Savings instantces displayed in the drop down should only be the savings accounts that are allowed for clients (ie, not for groups or centers).
• Savings instances drop down- all active savings instances should be displayed.
• Once a client application is saved (either in partial application or pending approval states) but prior to becoming active, user cannot edit the accounts by clicking on "Edit MFI information"
• The defaults from savings product definition and additional fields should be used to create the accounts. 
• If a user selects two of the same accounts, system will throw an error when “Preview” is clicked.
• If there are no savings products defined for clients, these fields (and the bold header) should be hidden. This feature is NICE TO HAVE but not required for version 1.
• Scenario
  • A client is created and one savings instance is included during client creation.
  • This savings instance is then made inactive.
  • Client status is now changed to Approved.
  • System will not create the savings account since the instance is Inactive.

 Out of Scope for Version 1.0

• Client transaction location, for example, online, ATM, at branch, at center meeting
• Variable Interest Method - In this method, the principal is fixed for every installment, but the amount paid against the interest changes. Thus, the installment changes every time in this method.
• Simple interest calculation: Adding interest to the account balance
• Multiple interest schemes per product.
• Determination of target savings amount by calculating the off of % of loan
• Checking at time of loan approval, whether/not savings account has sufficient funds for loan.
• Linking of accounts
• Bank routing tracking
• Fees and Penalties
• In group/center savings accounts, interest earned by individual clients will not be tracked
• UI to display individual contributions/withdrawals to the group savings account