Simple Credit Line Management System
Terminology
The following table contains Simple Credit Line Management System(SCLMS) related terminologies used in the article:
| Term | Description |
|---|---|
| Credit Limit | The credit facility extended to the account of a user. For example, if an account has been assigned a credit limit of INR 10,000, the account can spend up to INR 10,000 over and above the PPI account balance. |
| Credit Limit Balance | The unused credit limit that the account has. For example, if the account has a limit of INR 10,000 and INR 2,000 is utilized, the credit limit balance will be INR 8,000. |
| Audit Logs | Record of the usage of credit limit maintained for reporting purposes |
| Account States | Active - credit limit for account is active Inactive - credit limit for account has been deactivated, reversible state Disabled - credit limit for account has been deactivated, non-reversible state |
Simple Credit Limit Management System
Simple Credit Limit Management System(SCLMS) is a Fusion Offering that helps fintechs assign a credit limit to the account of a user. SCLMS facilitates Just in time funding to the account of the user.
For example User A has been assigned a credit limit of INR 10,000. His balance in the account is INR 2,000. Now he/she wishes to transact for INR 8,000. The transaction amount (INR 8,000) - Balance of account (INR 2,000) i.e the difference (INR 6,000) would be transferred Just in Time to the account of the user.
Given the balance of the account is now equal to the transaction amount, the transaction will be successful. JIT Funding is implemented with the help of
Interceptors
Along with the assignment of the credit limit, the CLMS also supports increasing and decreasing the credit limit balance.
For example: User A has been assigned a credit limit of INR 10,000 for a month. At the start of the month, both his credit limit and the credit limit balance are INR 10,000. During the month he consumes INR 9,000 of his credit limit. Now the credit limit is INR 10,000 however the credit limit balance is INR 1,000. After the month ends, he repays INR 9,000 and the additional interest that he owes to the fintech. The fintech then restores his credit limit balance to INR 10,000.
| Credit line extended for INR 10,000 | User makes a transaction of INR 1000 | User pays back the credit line consumed |
|---|---|---|
| Credit Limit = INR 10,000 Credit Limit Balance = INR 10,000 |
CreditLimit = INR 10,000 Credit Limit Balance = INR 9,000 |
Credit Limit = INR 10,000 Credit Limit Balance = INR 10,000 |