The Pismo platform provides capabilities for managing loans throughout their lifecycle. The platform holds the ledger for loans, incorporating support for loan disbursement and repayment and enabling in-life processes, such as prepayments, restructures, and early settlement.

Key participants in the loan lifecycle include:

• Borrower – A person or organization that accepts funds from a lender with the expectation that they will repay them.
• Lender – An individual, a public or private group, or a financial institution that makes funds available to a person or business with the expectation that they will be repaid.
• Regulator – A public or private entity that defines lending rules. These rules are intended to balance the needs of borrowers and lenders and to ensure economic stability.
• Banking correspondent / loan broker / originator – Intermediate players whose relationships with lenders enable them to distribute access to loans.

Financial institutions offer different products in different ways. For example, a financial institution could be a lender or an originator or both.

Digital lending components

To launch digital lending on the Pismo platform, you begin by working with the Pismo implementation team to set up an organization (Org).

Next, you set up programs within that Org.

Finally, you set up configurations specific to digital lending:

• Loan products – Templates used to create loans, standardizing how loans are established.
• Charge plans – Additional charges or fees that are attached to loan products.
• Penalty plans – Specification of how penalties are applied in the case of past due or early repayments.
• Repayment hierarchy – Defines the order in which payments are applied to loan components in the case of a partial repayment.

The following table summarizes the components of digital lending on the Pismo platform:

* A component is considered Single if you would normally have only one of them. A component is Multiple if it's normal to have more than one. For example, it's possible for a client to have only one rogram, but most clients have more than one, so Program is marked as Multiple.

** A component is considered Required if the digital lending product does not work without it. A component that's not technically required might still be required in practice because of local regulations or business rules.

The following sections describe how to set up these components.

Step 1 – Set up your Org

The Org is an object that represents your organization on the Pismo platform. You can’t create programs until you have an Org to put them in, so this step is mandatory. The process of setting up an Org is the same for all products on the Pismo platform. There is no API for this. The Pismo implementation team will hold a workshop where you'll be asked to provide the following information, along with other information about your banking needs:

When the implementation team creates your Org, it is assigned an identifier that is referred to as either an Org ID or a Tenant ID. It looks similar to this: TN-34778262-f4f0-464d-b4c6-a14e2dc6f4be. Most endpoints take this field as a parameter, usually in the header. You can use the Retrieve org data endpoint to retrieve the information for your organization.

For more information, see Organization.

Step 2 – Set up your program

Programs define the types of accounts a customer can open with your Org, such as credit, debit, and lending accounts. You can't create customer accounts without at least one program, so this step is mandatory.

You can set up a program using the Pismo Console. See Program types and parameters for more info.

Alternatively, you can set up a program using the Create program based on template endpoint, which takes the following fields:*

*Fields not listed in the above table are not applicable to digital lending.

The following sample code shows how to use this endpoint to create a lending program named "Sample_lending_program":

curl --request POST  
     --url <https://api-sandbox.pismolabs.io/programs/v1/programs/template>  
     --header 'Accept: application/json'  
     --header 'Authorization: Bearer eyGhbGciOiJSUzI1NiIsImtpZCI6IkQ3Y2JlZTU3MmFlM2MzZGQzNjBjNzA5OGRhOTA1MjMzNmJjN2FjYTIiLC'  
     --header 'Content-Type: application/json'  
     --data '  
{  
     "timezone": "America/Sao_Paulo",  
     "currency_numeric_code": "986",  
     "name": "Sample_lending_program",  
     "type": "LENDING"  
}'

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When you set up a program, you are prompted to accept default processing codes. If you choose not to accept them, then you need to set up your own processing codes in step 3. If you don’t accept the default codes or set up your own, your disbursement and repayment requests will return errors.

Step 3 – Set up processing codes

A processing code tells the Pismo platform how to handle a certain type of financial operation. See Processing codes and transaction types for more information about how the platform uses these codes. You create processing codes using the Create processing code endpoint. See Payments configurations for more information on how to create processing codes and map them to transaction types.

Step 4 – Configure accounting

The Pismo platform provides tools to keep track of business and financial transactions for accounting purposes. It enables you to create accounting accounts based on your organization's balance sheet. You can then configure accounting scripts that generate accounting entries based on accounting events. See Accounting overview for more information.

Step 5 – Set up charges and penalties

Charge plans

Charge plans enable you to set up additional charges that can later be linked to loan products. A charge can be a fixed amount, or it can be calculated as a percentage of the loan amount, with different options for how the charge can be collected.

Examples include administration fees, documentation fees, and deposits.

To create charge plans, use the Create a charge plan endpoint. You can use other endpoints to disable, reenable, or delete charge plans.

Penalty plans

Penalty plans enable you to apply a penalty when loans are either repaid early (prepayment) or when they fall into arrears.

To create penalty plans, use the Create a penalty plan endpoint. You can use other endpoints to disable, reenable, or delete penalty plans.

Step 6 – Set up a repayment hierarchy

If a customer makes a payment that is less than the amount due, the repayment hierarchy determines the order in which the payment is applied to principal, interest, taxes, charges, and fees.

You create a repayment hierarchy using the Create a repayment hierarchy endpoint. Other endpoints enable you to list, get, disable, reenable, and delete hierarchies.

After you create a repayment hierarchy, you can attach it to one or more loan products. The Create loan product endpoint has a repayment_hierarchy_code field, where you enter the code of the hierarchy that you want to use. (See Set up loan products.)

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A loan product can have only one repayment hierarchy. The List repayment hierarchies endpoint lists the hierarchies for all your programs.

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There is no default repayment hierarchy. If you don’t assign a repayment hierarchy to a loan product when you create it, borrowers will not be able to make partial repayments on loans based on that product.

Step 7 – Set up loan products

Loan products in the Pismo platform represent the products that are being offered to end customers, providing a template that incorporates various parameters that control the behavior of loans that are created.

To set up products for loans, use the Create loan product endpoint. Existing configured loan products can be retrieved using the list and get operations.