T24 LIMIT

Parameters
Objectives

 After completing this learning unit, you will be able to

 Set up parameters and related tables
 Understand the Limit build sequence

Slide 2
Limit Menu

Slide 3
Dependencies – Static Tables Related

CURRENCY

ACCOUNT.
INDUSTRY
CLASS

LIMITS

ACCOUNT. COUNTRY
PARAMETER

CUSTOMER.
STATUS

Slide 4
Parameter Tables

LIMITS

LIMIT.REFERENCE LIMIT.PARAMETER

Slide 5
Limit Levels

Global

Products

Sub-Products Sub-Products Level 0

Sub-Products Sub-Products Level 1

Sub-Products Sub-Products Level 2

Slide 6
Set up Products

 Multi level sub-products

 Possible to set up to 12 levels
 Mandatory - Product
 Optional - Global + Sub product levels 0 to 9
 Important to draw inter-relationship and hierarchy by way of a tree
diagram first
 Limits can be defined only in bottom-up sequencing
 Lowest Multi Level Sub Product should be defined first.
 At each Multi Level you define the Level and Reference Child, if any

Slide 7
LIMIT.REFERENCE

 Admin menu/Limit/Create Limit Reference

Slide 8
LIMIT.REFERENCE - ID of Limit Products

 Limit products are classified as Global, Product and Sub Products and
identified in a particular way through the Ids

TYPE LENGTH EXAMPLE

GLOBAL 5–7 10000 200000 3000000

PRODUCT 3–4 100 4000 3000

111 4013
SUBPRODUCT 3–4 3080 3091
137 4034

Slide 9
LIMIT.REFERENCE – Types of Limit Products

FX

TB

DP

IN

NULL

Slide 10
LIMIT.REFERENCE – Types of Limit Products

 FX
 Foreign exchange limit types, usually include Clean risk to stipulate
maximum value of contracts that may mature on any single delivery date.
(a.k.a. Delivery risk)
 TB
 Time band Limits can be set for time periods to control exposure by period
for LD, MM, SC etc. ‘Longer the duration, higher the risk’ concept.
Automatically apportioned from longer term to short
 DP
 Deposit type mainly used in LD and MM for information purpose
 IN
 Information purpose. Will not trigger any overrides unless CHECK.LIMIT
flag is set to Yes in Limit record
 Null
 Left blank for Account and Global limits
All related Limit Products and Sub Products should have the same
attribute in this field

Slide 11
LIMIT.REFERENCE – Reducing Limit

 REDUCING.LIMIT field
 Indicates whether the Limit regains its original value on liquidation or
repayment of utilisation / draw down.
 Options are
 Y – Reducing or Non – revolving in nature.
 N – Non reducing or Revolving in nature
 Account, Forex and Money market products can only be defined as Non
reducing or Revolving in nature
 All products falling under a Global line and all sub products under a Global
line will all have to have the same value in this field.
 DEFAULT.CHECK
 Specifies whether the Limit Reference requires checking, and whether limit
overrides are required, when Limit records are created by default
 For Limits which record data for information only (such as deposits and
Fiduciary Placements), this field should be set to 'NO' to prevent
overrides being generated

Slide 12
LIMIT.REFERENCE – Limit Sub allocation

500
Loans

High risk

300 400
Overdrafts LCs

Medium risk Low risk

Slide 13
LIMIT.REFERENCE – Limit Percentage

 LIMIT.PERCENTAGE field
 Defines the percentage amount of each transaction movement that is to be
monitored against the limit amount.
 This is a flat percentage applied to all contracts under the limit type
– If 10% is indicated, for a contract value of 100,000 limit of only
10,000 will be updated
 To be defined only at the lowest level.
– No input allowed for Global limit references and for Products / Sub
products with a reference child
 Always taken as 100% for overdrafts in accounts
 The percentage value could be changed through LIMIT.CHANGE

Slide 14
LIMIT.REFERENCE – Rate Mechanism

 CONVERT.RATE field
 Specifies the rate mechanism to be used for revaluation of limit outstanding
when the limit and the transaction are in different currencies
 When Update.Rate field in LIMIT.PARAMETER is set to No, the mid
rate will be uniformly used for revaluation
 When set to Yes, Options given here will be applied for the respective
Limit products.
– BUY-BUY, BUY-MID, BUY-SEL, MID-BUY, MID-MID, MID-SEL,
SEL-BUY, SEL-MID, SEL-SEL
» Home currency USD. Contract currency GBP. Limit
currency EUR.
» Under BUY-BUY, GBP will be converted into USD at Buy rate
and USD to EUR at BUY rate.
» Under SEL-BUY, GBP will be converted into USD at Sell rate
and USD to EUR at Buy rate
– However in a Limit structure the rate specified in the lowest limit
reference used will be taken for updating the outstanding in the
higher limits in the hierarchy

Slide 15
LIMIT.REFERENCE – Rate Mechanism

Case - 1
Limit XXXXXX.400.01 is in LCY (Say USD). A contract forUSD100000 is put through to hit the
limit. In this case since both limit and the transactions are in LCY there is no conversion involved
and therefore the limit outstanding will be updated with -100000

Case - 2
A contract for GBP100000 is put through to hit the limit given in case1. Here the transaction in
GBP will be converted to LCY which is also the limit currency, using the first component of the
CONVERT. RATE specified in the limit reference 400 which in this case is the BUY rate of the
transaction currency. If the Buy rate for GBP is 1.50 then the limit outstanding will be up dated
by-150000(100000*1.50) and the total outstanding in the limit after this transaction will be -
100000-150000= -250000.

Case - 3

Limit YYYYYY.400.01 is in EUR. A contract for GBP100000 is put through to hit this limit.
BUY rate of GBP=1.50
Sell rate of EUR=1.20.
In this case the transaction in GBP will be converted to USD by using the first component of the
CONVERT. RATE which is BUY. This amount will be converted t o EUR which is the limit
currency, using the second component of the CONVERT. RATE which is SEL. So the limit
outstanding will be calculated using the formula 100000*1.50/1.20=125000(EUR)

Slide 16
Workshop

 Define the following Limit Structure

Global Revolving Limit Non Reducing, ID XXX0000

Product Loans Non Reducing, ID XX00

Sub product Project loan ID XX01

Study Loan ID XX02

Slide 17
Workshop - Solution

Global

XXX0000
30000

Guarantee Loans

XX00
1700

Project loan Study Loan

XX01 XX02
1701 1702

Slide 18
LIMIT.PARAMETER

 Admin menu\Limit\Update Limit Parameter

Slide 19
LIMIT.PARAMETER – Monitoring and Reporting
PARAMETERISATION
 Can produce reports before stipulated days of expiry and review dates
 1 to 99 days possible
 Date and cycle for Country, Commodity and Currency reports
 Daily, Weekly, TWMTH and Monthly frequencies possible
 Possible to report under suitable groupings of Commodities, Countries
and Currency defined in fields
 COM.GROUP.GRP and COM.PROD.NO
 LCs (Group) and Sight and Acceptance L/Cs (Products)
 COU.PRODUCT.GRP and COU.PROD.NO
 CCY.PRODUCT.GRP and CCY.PROD.NO
 Also possible to set limits for such groups in LIMIT.COUNTRY,
LIMIT.COMMODITY and LIMIT.CURRENCY

Slide 20
LIMIT.PARAMETER – Revaluation Related

 Limits in foreign currencies are revalued from time to time as set in

REVALUTION.TIME field
 Date of first revaluation and further frequency
 Whether the revaluation is at mid-rate or a combination of rates like
BUY-BUY, BUY-SELL, SELL-BUY etc. Indicated through
UPDATE.RATE field
 NO indicates that the limit should be revalue at mid rate
 YES indicates that the rate mechanism choice to be take from
CONVERT.RATE field specified in LIMIT.REFERENCE

Slide 21
LIMIT.PARAMETER – Default Limits

Slide 22
LIMIT.PARAMETER – Respective application to products
PARAMETERISATION
 The product number will be attached to the respective application. If the
user desires more specific limit verifications, then he can attach the
product number to specific application and category.
 Application
 Product ID
 Decision Field
 Decision
 Decision From
 Decision To

Slide 23
Limit Build Sequence

LIMITS

LIMIT.REFERENCE LIMIT.PARAMETER

Slide 24
Workshop - 2

 Link the Limit references created in the previous workshop to Loan

products of LOANS.AND. DEPOSITS application in
LIMIT.PARAMETER.

Slide 25
LIMIT.CURRENCY
PARAMETERISATION
 Defines Limits by Currency.
 Maintained on-line, but the System does not attempt to provide real-
time information about Currency Limit utilization.
 Produced by system default, if not defined earlier and gets updated
with subsequent inputs.
 Report showing all of the Currency Limits and the use made of each is
produced, at EOD process,
 Frequency defined on the LIMIT.PARAMETER table.

Slide 26
LIMIT.COMMODITY.GRP
PARAMETERISATION

 Allows definitions for commodities /industry groupings

 When set up, file LIMIT.COMMODITY can be used to define Limits for
Commodity Groups as well as for individual Commodities.
 System will keep track of outstanding for the grouping, by means of
overnight reporting.
 It is possible to define any group of Industries as a Commodity Group.

Slide 27
LIMIT.COMMODITY
PARAMETERISATION
 Defines Limits by Commodity (Industry) Type.
 File is maintained on-line but no real time information on utilisation..
 Report showing all Commodity Limits and the corresponding utilisation
is produced at a frequency as defined on the LIMIT.PARAMETER
table, as an EOD process.
 If it is necessary to define Limits for a group of commodities, then the
Commodity grouping is specified by the LIMIT.COMMODITY.GRP
table.

Slide 28
LIMIT.COUNTRY
PARAMETERISATION

 Defines Limits by Country or Group of

Countries.
 No real-time information of Limit utilisation.
 Report on Country Limits and the utilisation
is produced at a frequency as defined on the
LIMIT.PARAMETER table.
 If it is necessary to define Limits for a Group
of Countries, such as the EEC or South
America, then the Country Grouping is
specified by the LIMIT.COUNTRY.GRP
table.

Slide 29
LIMIT.COUNTRY.GRP
PARAMETERISATION

 Allows the definition of Country Groupings.

 The file LIMIT.COUNTRY can then be used to define Limits for
Country Groups as well as for individual Countries.
 Overnight reporting.
 No logical grouping restriction
 Possible to define South Africa, for instance, as part of Europe.

Slide 30
T24 Limit: Parameters – A review

 In this learning unit, you learnt about Limit Parameter

 You will now be able to:

 Explain the dependencies of Limit module with other application
 Understand the limit build sequence
 Parameterization of LIMITs

Slide 31
Questions ?

Slide 32
Thank You