Stop Managing Structured Debt on Spreadsheets: Why NBFCs Need an LMS Built for Complexity

Structured Lending Is Not a Corner Case

If you are a corporate lending NBFC, you are not in the business of vanilla credit.

Your deals are engineered, not standardized. You lend against inventory cycles, promoter equity, receivables, and future cash flows. You structure Revolving Credit Facilities (RCFs), impose Clean-Down clauses, split risk with co-lenders, and protect yield through exit fees and PIK interest.

Yet, many NBFCs attempt to manage this complexity on LMS platforms designed for linear EMI loans.

When the system fails, the fallback is almost always the same: Excel spreadsheets.

This is where operational risk begins.

Why Generic LMS Platforms Break

Most Loan Management Systems were built for retail lending:

• Fixed tenures
• Monthly EMIs
• Straight-line amortization
• One loan = one balance = one ledger

Structured corporate lending violates all of these assumptions.

The result? Workarounds, manual overrides, shadow spreadsheets, and reconciliation nightmares.

Encore360 was built specifically to eliminate this gap.

1. The RCF Clean-Down Problem (The “Sawtooth” Balance)

A Revolving Credit Facility with a mandatory Clean-Down clause is a liquidity test—not a term loan.

Typical structure:

• ₹10 Cr sanctioned for 12 months
• 90-day drawdowns
• Mandatory repayment to zero every quarter
• Cooling-off period (e.g., 5 days)
• Redraw allowed only after compliance

Where traditional systems fail

In most LMS platforms:

• A balance of zero = Loan Closed
• Closing the loan forces a new application for the next drawdown
• New LAN, repeated documentation, broken continuity

Operations teams end up reopening loans every quarter—pure friction.

The Encore360 approach

We model RCFs using a Master Facility architecture.

• Master Limit: ₹10 Cr valid for 1 year
• Drawdowns: Treated as controlled child transactions
• State-aware lifecycle:
  • Active → Cleaned → Cooling → Eligible
• System-enforced guardrails:
  • No redraw during cooling-off
  • Automatic reactivation post cool-off

The account never “dies.” It transitions states—exactly as the credit agreement intends.

2. Repayment Structures Beyond EMIs

Corporate cash flows are uneven by design.

A real estate developer may generate no inflows for 24 months and liquidate inventory in month 25. Forcing this into EMI logic is accounting theater.

Encore360 supports repayment structures natively, not as exceptions:

• Bullet Repayments: 100% principal at maturity
• Balloon Schedules: e.g., 10% – 10% – 80%
• Moratorium Logic:
  • Interest-only periods
  • Deferred principal start
  • Fully configurable, no custom code

Schedules are generated mathematically correct—without post-facto adjustments.

3. Payment-in-Kind (PIK) Interest Without Distortion

In mezzanine finance or stressed situations, interest is often capitalized.

Most systems:

• Flag this as delinquency
• Require manual journal entries
• Distort yield reporting

Encore360’s PIK Engine

• Automatically capitalizes interest into principal
• Adjusts outstanding balances correctly
• Preserves yield calculations
• Avoids false NPA triggers

The system understands that non-cash interest ≠ default.

4. Co-Lending Without Reconciliation Chaos

Co-lending introduces structural accounting complexity:

• One borrower
• Multiple funders
• Different yields
• Shared cash flows

Encore360 handles this using Split-Ledger Accounting.

How it works

• Single customer view: One loan, one EMI
• Backend reality:
  • Separate ledgers for NBFC share and partner bank share
  • Automated allocation of every repayment
• Blended customer rate: e.g., 12%
• True economic yield:
  • NBFC earns 14%
  • Bank earns 9%

Every rupee is split at source. No post-period reconciliation. No suspense accounts.

5. Yield Protection Is Enforced, Not Remembered

In structured lending, yield is protected through:

• Structuring fees
• Renewal fees (RCFs)
• Exit charges on early repayment

Encore360 ensures these clauses are system-enforced, not operator-dependent.

• Ind AS–compliant fee amortization
• Exit fee calculation based on actual exit date
• IRR vs XIRR visibility per facility

You always know your true return on capital—not just the coupon rate.

6. Compliance Is a Built-In Output

Structured lending attracts regulatory scrutiny by default.

Manual reporting to:

• NeSL
• CERSAI
• Commercial CIBIL

…does not scale.

Encore360 automates this layer

• Commercial CIBIL & CRIF:
  Correct aggregation across tranches and co-lenders
• NeSL:
  Structured creditor data for IBC compliance
• CERSAI:
  Accurate, timely security interest registration

Regulatory reporting becomes a deterministic system output—not a monthly fire drill.

The Bottom Line

Your credit team already does the hard work—structuring deals to manage risk and protect yield.

A spreadsheet-driven LMS should not be the weakest link in that chain.

Encore360 is built for Indian NBFC reality:
Complex structures. High velocity. Zero tolerance for accounting ambiguity.

Still managing structured debt on Excel? Book a Demo to see how Encore360 handles structured lending at scale.