Variable Rate Repricing

Variable rate repricing adjusts loan interest rates when a linked market or policy index changes. It is used for products where the borrower rate is calculated as an index rate plus a product spread.

Workspace Reference

Area	Where To Work	What Users Do There
Pricing rate indices	Administration -> Financial Setup -> Pricing	Maintain approved policy, treasury, or market reference rates.
Loan products	Loans -> Setup -> Products	Configure the index rate, spread, repricing policy, and interest method.
Loan accounts	Loans -> Operations -> Accounts	Review account rate history, run manual repricing, and confirm schedule effect.
Batch operations	Loans -> Operations -> Accounts	Run variable-rate repricing for eligible accounts after an approved index change.
Finance review	Accounting -> Operations and Reporting -> Reports	Review downstream accrual, GL, and portfolio reporting impact.

When To Use It

Use variable rate repricing when a loan product should follow an external or internal reference rate, such as a central bank rate, policy rate, treasury rate, or board-approved lending index.

Do not use this workflow for fixed-rate products. Fixed-rate loans keep the rate approved at account creation unless a separate manual change is authorised.

How The Rate Is Calculated

The borrower rate is:

New Loan Rate = Current Index Rate + Product Spread

Example: if the index rate is 9.75% and the product spread is 10.00%, the loan rate becomes 19.75%.

Product Settings That Matter

The loan product must define the variable-rate behavior before accounts can be repriced reliably:

Setting	What It Means
Index Rate	The reference rate that drives the product.
Spread	The margin added to the index rate.
Repricing Policy	Whether future schedule rows are recalculated immediately or whether the new rate applies from the next accrual cycle.
Interest Method	Determines how the recalculated rate affects scheduled interest.

Products without an index rate are treated as fixed-rate for this workflow.

Repricing Policies

Policy	User Impact
Future Only	Unpaid future installments are recalculated using the new rate. Paid or partially paid installments remain unchanged.
From Next Accrual	The account rate is updated, but the schedule is not immediately rebuilt. Interest calculation picks up the new rate from the next eligible accrual run.

Automatic Repricing

Automatic repricing can run as part of the institution's daily processing. Eligible accounts are reviewed, compared with the latest approved index rate, and updated only when the calculated rate has changed.

The automatic run normally skips:

• closed or fully settled accounts
• fixed-rate products
• products without an active index rate
• accounts already carrying the current calculated rate

Manual Repricing

Use manual repricing when an authorised user needs to adjust one account outside the normal automatic run.

Typical steps:

1. Open the loan account.
2. Choose the repricing action.
3. Review the current rate shown on the form.
4. Enter the new rate.
5. Add a reason.
6. Submit for approval if required.
7. Review the updated account rate and schedule effect.

Manual repricing should always include a clear reason because rate changes affect borrower obligations.

Manual Repricing Fields

Field	How To Use It
New Interest Rate (%)	Required. Enter the new annual loan rate. The form shows the current rate as guidance.
Reason	Explain why the account is being repriced manually, such as an approved exception, corrected rate, restructuring condition, or customer-specific review.

The new rate should be checked against the product policy before submission. If the product is index-linked, confirm whether the entered rate is the approved calculated rate or an authorised exception.

Batch Operations From Loan Accounts

Loan account operations can include several controlled batch actions:

Batch Action	Purpose
Interest Accrual	Calculates and applies eligible interest according to product rules and accounting policy.
Penalty Application	Applies overdue penalties according to arrears and penalty settings.
Arrears Update	Refreshes arrears days, arrears status, and related collection indicators.
Auto Sweep	Runs configured automatic movements, such as eligible deposit-to-loan deductions.
Variable Rate Repricing	Updates eligible variable-rate loans after an approved rate change.

These actions should be run only by users who understand the active business date, product settings, and downstream accounting effect.

Batch Repricing

Batch repricing processes all eligible variable-rate accounts for a selected run date. Use it after an approved index-rate change when many accounts should be updated together.

Before running a batch, confirm:

• the new index rate is approved
• the effective date is correct
• affected products have the correct spread
• teams understand whether schedules will be recalculated immediately

Rate Change History

Every repricing event should be reviewable from account history. The useful user-facing details are:

• previous rate
• new rate
• index rate and spread used
• change reason
• effective date
• whether the change was automatic or manual
• user or process that initiated the change

Common Issues

Issue	Likely Cause	What To Check
Loan was not repriced	Product is fixed-rate or has no index rate	Review product pricing settings.
Rate did not change	New calculated rate equals the current rate	Confirm the index rate and spread.
Schedule did not recalculate	Product uses the next-accrual policy	This may be expected. Review the product policy.
Only some accounts changed	Some accounts are closed, current-rate, or ineligible	Review account status and product configuration.
Borrower disputes the change	Reason or effective date is unclear	Review rate history and approval notes.

Related Guides

• Loan Products
• Loan Accounts
• Loan Operations