FINERACT-2421: Adjust interest with MIR and CBR results in improper allocations

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/Loan.java

@@ -1636,6 +1636,10 @@ public class Loan extends AbstractAuditableWithUTCDateTimeCustom<Long> {
         return this.loanTermVariations.stream().filter(LoanTermVariations::isActive).collect(Collectors.toList());
     }
 
+    public void setLoanTermVariations(List<LoanTermVariations> loanTermVariations) {
+        this.loanTermVariations = loanTermVariations;
+    }
+
     public boolean isTopup() {
         return this.isTopup;
     }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/AbstractLoanRepaymentScheduleTransactionProcessor.java

@@ -179,9 +179,11 @@ public abstract class AbstractLoanRepaymentScheduleTransactionProcessor implemen
             }
 
             if (loanTransaction.isRepaymentLikeType() || loanTransaction.isInterestWaiver() || loanTransaction.isRecoveryRepayment()) {
+                Loan loan = loanTransaction.getLoan();
                 // pass through for new transactions
                 if (loanTransaction.getId() == null) {
-                    processLatestTransaction(loanTransaction, new TransactionCtx(currency, installments, charges, overpaymentHolder, null));
+                    processLatestTransaction(loanTransaction, new TransactionCtx(currency, installments, charges, overpaymentHolder, null,
+                            loan.getActiveLoanTermVariations()));
                     loanTransaction.adjustInterestComponent();
                 } else {
                     /**
@@ -192,8 +194,8 @@ public abstract class AbstractLoanRepaymentScheduleTransactionProcessor implemen
 
                     // Reset derived component of new loan transaction and
                     // re-process transaction
-                    processLatestTransaction(newLoanTransaction,
-                            new TransactionCtx(currency, installments, charges, overpaymentHolder, null));
+                    processLatestTransaction(newLoanTransaction, new TransactionCtx(currency, installments, charges, overpaymentHolder,
+                            null, loan.getActiveLoanTermVariations()));
                     newLoanTransaction.adjustInterestComponent();
                     /**
                      * Check if the transaction amounts have changed. If so, reverse the original transaction and update

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/TransactionCtx.java

@@ -26,6 +26,7 @@ import org.apache.fineract.organisation.monetary.domain.MonetaryCurrency;
 import org.apache.fineract.portfolio.loanaccount.domain.ChangedTransactionDetail;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanCharge;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanRepaymentScheduleInstallment;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTermVariations;
 
 @Data
 @AllArgsConstructor
@@ -36,4 +37,5 @@ public class TransactionCtx {
     private final Set<LoanCharge> charges;
     private final MoneyHolder overpaymentHolder;
     private final ChangedTransactionDetail changedTransactionDetail;
+    private final List<LoanTermVariations> activeLoanTermVariations;
 }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/rescheduleloan/handler/ApproveLoanRescheduleRequestCommandHandler.java

@@ -18,26 +18,22 @@
  */
 package org.apache.fineract.portfolio.loanaccount.rescheduleloan.handler;
 
+import lombok.RequiredArgsConstructor;
 import org.apache.fineract.commands.annotation.CommandType;
 import org.apache.fineract.commands.handler.NewCommandSourceHandler;
 import org.apache.fineract.infrastructure.core.api.JsonCommand;
 import org.apache.fineract.infrastructure.core.data.CommandProcessingResult;
 import org.apache.fineract.portfolio.loanaccount.rescheduleloan.service.LoanRescheduleRequestWritePlatformService;
-import org.springframework.beans.factory.annotation.Autowired;
 import org.springframework.stereotype.Service;
 import org.springframework.transaction.annotation.Transactional;
 
 @Service
+@RequiredArgsConstructor
 @CommandType(entity = "RESCHEDULELOAN", action = "APPROVE")
 public class ApproveLoanRescheduleRequestCommandHandler implements NewCommandSourceHandler {
 
     private final LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService;
 
-    @Autowired
-    public ApproveLoanRescheduleRequestCommandHandler(LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService) {
-        this.loanRescheduleRequestWritePlatformService = loanRescheduleRequestWritePlatformService;
-    }
-
     @Transactional
     @Override
     public CommandProcessingResult processCommand(JsonCommand jsonCommand) {

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/rescheduleloan/handler/CreateLoanRescheduleRequestCommandHandler.java

@@ -18,26 +18,22 @@
  */
 package org.apache.fineract.portfolio.loanaccount.rescheduleloan.handler;
 
+import lombok.RequiredArgsConstructor;
 import org.apache.fineract.commands.annotation.CommandType;
 import org.apache.fineract.commands.handler.NewCommandSourceHandler;
 import org.apache.fineract.infrastructure.core.api.JsonCommand;
 import org.apache.fineract.infrastructure.core.data.CommandProcessingResult;
 import org.apache.fineract.portfolio.loanaccount.rescheduleloan.service.LoanRescheduleRequestWritePlatformService;
-import org.springframework.beans.factory.annotation.Autowired;
 import org.springframework.stereotype.Service;
 import org.springframework.transaction.annotation.Transactional;
 
 @Service
+@RequiredArgsConstructor
 @CommandType(entity = "RESCHEDULELOAN", action = "CREATE")
 public class CreateLoanRescheduleRequestCommandHandler implements NewCommandSourceHandler {
 
     private final LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService;
 
-    @Autowired
-    public CreateLoanRescheduleRequestCommandHandler(LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService) {
-        this.loanRescheduleRequestWritePlatformService = loanRescheduleRequestWritePlatformService;
-    }
-
     @Transactional
     @Override
     public CommandProcessingResult processCommand(JsonCommand jsonCommand) {

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/rescheduleloan/handler/RejectLoanRescheduleRequestCommandHandler.java

@@ -18,26 +18,22 @@
  */
 package org.apache.fineract.portfolio.loanaccount.rescheduleloan.handler;
 
+import lombok.RequiredArgsConstructor;
 import org.apache.fineract.commands.annotation.CommandType;
 import org.apache.fineract.commands.handler.NewCommandSourceHandler;
 import org.apache.fineract.infrastructure.core.api.JsonCommand;
 import org.apache.fineract.infrastructure.core.data.CommandProcessingResult;
 import org.apache.fineract.portfolio.loanaccount.rescheduleloan.service.LoanRescheduleRequestWritePlatformService;
-import org.springframework.beans.factory.annotation.Autowired;
 import org.springframework.stereotype.Service;
 import org.springframework.transaction.annotation.Transactional;
 
 @Service
+@RequiredArgsConstructor
 @CommandType(entity = "RESCHEDULELOAN", action = "REJECT")
 public class RejectLoanRescheduleRequestCommandHandler implements NewCommandSourceHandler {
 
     private final LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService;
 
-    @Autowired
-    public RejectLoanRescheduleRequestCommandHandler(LoanRescheduleRequestWritePlatformService loanRescheduleRequestWritePlatformService) {
-        this.loanRescheduleRequestWritePlatformService = loanRescheduleRequestWritePlatformService;
-    }
-
     @Transactional
     @Override
     public CommandProcessingResult processCommand(JsonCommand jsonCommand) {

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/InterestRefundService.java

@@ -22,6 +22,7 @@ import java.time.LocalDate;
 import java.util.List;
 import org.apache.fineract.organisation.monetary.domain.Money;
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTermVariations;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanTransaction;
 import org.apache.fineract.portfolio.loanaccount.domain.transactionprocessor.LoanRepaymentScheduleTransactionProcessor;
 import org.springframework.transaction.annotation.Propagation;
@@ -33,5 +34,6 @@ public interface InterestRefundService {
 
     @Transactional(readOnly = true, propagation = Propagation.REQUIRES_NEW)
     Money totalInterestByTransactions(LoanRepaymentScheduleTransactionProcessor processor, Long loanId,
-            LocalDate relatedRefundTransactionDate, List<LoanTransaction> newTransactions, List<Long> oldTransactionIds);
+            LocalDate relatedRefundTransactionDate, List<LoanTransaction> newTransactions, List<Long> oldTransactionIds,
+            List<LoanTermVariations> activeLoanTermVariations);
 }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanChargeService.java

@@ -597,7 +597,7 @@ public class LoanChargeService {
         loanCharges.add(charge);
         loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), chargesPayment,
                 new TransactionCtx(loan.getCurrency(), chargePaymentInstallments, loanCharges,
-                        new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                        new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
 
         loanLifecycleStateMachine.determineAndTransition(loan, chargesPayment.getTransactionDate());
     }

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanDownPaymentHandlerServiceImpl.java

@@ -140,7 +140,7 @@ public class LoanDownPaymentHandlerServiceImpl implements LoanDownPaymentHandler
         if (processLatest) {
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), loanTransaction,
                     new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
             if (!loan.isProgressiveSchedule() && loan.isInterestBearingAndInterestRecalculationEnabled()) {
                 if (currentInstallment == null || currentInstallment.isNotFullyPaidOff()) {
                     reprocessOnPostConditions = true;

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanRefundService.java

@@ -83,7 +83,7 @@ public class LoanRefundService {
 
         loadTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), loanTransaction,
                 new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                        new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                        new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
 
         loanLifecycleStateMachine.determineAndTransition(loan, loanTransaction.getTransactionDate());
     }

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/delinquency/service/ProgressivePossibleNextRepaymentCalculationServiceImpl.java

@@ -57,7 +57,8 @@ public class ProgressivePossibleNextRepaymentCalculationServiceImpl extends Abst
         ProgressiveLoanInterestScheduleModel scheduleModel = optionalScheduleModel.get();
         List<LoanRepaymentScheduleInstallment> repaymentScheduleInstallments = loan.getRepaymentScheduleInstallments();
         ProgressiveTransactionCtx ctx = new ProgressiveTransactionCtx(loan.getCurrency(), repaymentScheduleInstallments, Set.of(),
-                new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail(), scheduleModel);
+                new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail(), scheduleModel,
+                loan.getActiveLoanTermVariations());
         ctx.setChargedOff(loan.isChargedOff());
         ctx.setWrittenOff(loan.isClosedWrittenOff());
         ctx.setContractTerminated(loan.isContractTermination());

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessor.java

@@ -229,7 +229,7 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
         ProgressiveLoanInterestScheduleModel scheduleModel = emiCalculator.generateInstallmentInterestScheduleModel(installments,
                 LoanConfigurationDetailsMapper.map(loan), installmentAmountInMultiplesOf, overpaymentHolder.getMoneyObject().getMc());
         ProgressiveTransactionCtx ctx = new ProgressiveTransactionCtx(currency, installments, charges, overpaymentHolder,
-                changedTransactionDetail, scheduleModel);
+                changedTransactionDetail, scheduleModel, loan.getActiveLoanTermVariations());
 
         List<ChangeOperation> changeOperations = createSortedChangeList(loanTermVariations, loanTransactions, charges);
 
@@ -571,7 +571,7 @@ public class AdvancedPaymentScheduleTransactionProcessor extends AbstractLoanRep
                         .filter(LoanTransaction::isNotReversed).filter(tr -> tr.getId() == null).toList());
                 if (validateInterestRefundTransactionRelation(loanTransaction)) {
                     final Money interestAfterRefund = interestRefundService.totalInterestByTransactions(this, loan.getId(), targetDate,
-                            modifiedTransactions, unmodifiedTransactionIds);
+                            modifiedTransactions, unmodifiedTransactionIds, ctx.getActiveLoanTermVariations());
                     final Money newAmount = interestBeforeRefund.minus(progCtx.getSumOfInterestRefundAmount()).minus(interestAfterRefund);
                     loanTransaction.updateAmount(newAmount.getAmount());
                 }

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/ProgressiveTransactionCtx.java

@@ -28,6 +28,7 @@ import org.apache.fineract.organisation.monetary.domain.Money;
 import org.apache.fineract.portfolio.loanaccount.domain.ChangedTransactionDetail;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanCharge;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanRepaymentScheduleInstallment;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTermVariations;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanTransaction;
 import org.apache.fineract.portfolio.loanaccount.domain.transactionprocessor.MoneyHolder;
 import org.apache.fineract.portfolio.loanaccount.domain.transactionprocessor.TransactionCtx;
@@ -52,14 +53,16 @@ public class ProgressiveTransactionCtx extends TransactionCtx {
 
     public ProgressiveTransactionCtx(MonetaryCurrency currency, List<LoanRepaymentScheduleInstallment> installments,
             Set<LoanCharge> charges, MoneyHolder overpaymentHolder, ChangedTransactionDetail changedTransactionDetail,
-            ProgressiveLoanInterestScheduleModel model) {
-        this(currency, installments, charges, overpaymentHolder, changedTransactionDetail, model, Money.zero(currency));
+            ProgressiveLoanInterestScheduleModel model, List<LoanTermVariations> activeLoanTermVariations) {
+        this(currency, installments, charges, overpaymentHolder, changedTransactionDetail, model, Money.zero(currency),
+                activeLoanTermVariations);
     }
 
     public ProgressiveTransactionCtx(MonetaryCurrency currency, List<LoanRepaymentScheduleInstallment> installments,
             Set<LoanCharge> charges, MoneyHolder overpaymentHolder, ChangedTransactionDetail changedTransactionDetail,
-            ProgressiveLoanInterestScheduleModel model, Money sumOfInterestRefundAmount) {
-        super(currency, installments, charges, overpaymentHolder, changedTransactionDetail);
+            ProgressiveLoanInterestScheduleModel model, Money sumOfInterestRefundAmount,
+            List<LoanTermVariations> activeLoanTermVariations) {
+        super(currency, installments, charges, overpaymentHolder, changedTransactionDetail, activeLoanTermVariations);
         this.sumOfInterestRefundAmount = sumOfInterestRefundAmount;
         this.model = model;
     }

fineract-progressive-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/service/InterestScheduleModelRepositoryWrapperImpl.java

@@ -112,7 +112,8 @@ public class InterestScheduleModelRepositoryWrapperImpl implements InterestSched
             savedModel = extractModel(progressiveLoanModel);
             if (savedModel.isPresent() && progressiveLoanModel.get().getBusinessDate().isBefore(businessDate)) {
                 ProgressiveTransactionCtx ctx = new ProgressiveTransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(),
-                        Set.of(), new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail(), savedModel.get());
+                        Set.of(), new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail(), savedModel.get(),
+                        loan.getActiveLoanTermVariations());
                 ctx.setChargedOff(loan.isChargedOff());
                 ctx.setWrittenOff(loan.isClosedWrittenOff());
                 ctx.setContractTerminated(loan.isContractTermination());

fineract-progressive-loan/src/test/java/org/apache/fineract/portfolio/loanaccount/domain/transactionprocessor/impl/AdvancedPaymentScheduleTransactionProcessorTest.java

@@ -164,8 +164,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         when(charge.updatePaidAmountBy(refEq(chargeAmountMoney), eq(1), refEq(zero))).thenReturn(chargeAmountMoney);
         when(loanTransaction.isPenaltyPayment()).thenReturn(false);
 
-        underTest.processLatestTransaction(loanTransaction,
-                new TransactionCtx(currency, List.of(installment), Set.of(charge), new MoneyHolder(overpaidAmount), null));
+        underTest.processLatestTransaction(loanTransaction, new TransactionCtx(currency, List.of(installment), Set.of(charge),
+                new MoneyHolder(overpaidAmount), null, loan.getActiveLoanTermVariations()));
 
         Mockito.verify(installment, times(1)).payFeeChargesComponent(eq(transactionDate), eq(chargeAmountMoney));
         Mockito.verify(loanTransaction, times(1)).updateComponents(refEq(zero), refEq(zero), refEq(chargeAmountMoney), refEq(zero));
@@ -208,8 +208,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         when(charge.updatePaidAmountBy(refEq(transactionAmountMoney), eq(1), refEq(zero))).thenReturn(transactionAmountMoney);
         when(loanTransaction.isPenaltyPayment()).thenReturn(false);
 
-        underTest.processLatestTransaction(loanTransaction,
-                new TransactionCtx(currency, List.of(installment), Set.of(charge), new MoneyHolder(overpaidAmount), null));
+        underTest.processLatestTransaction(loanTransaction, new TransactionCtx(currency, List.of(installment), Set.of(charge),
+                new MoneyHolder(overpaidAmount), null, loan.getActiveLoanTermVariations()));
 
         Mockito.verify(installment, times(1)).payFeeChargesComponent(eq(transactionDate), eq(transactionAmountMoney));
         Mockito.verify(loanTransaction, times(1)).updateComponents(refEq(zero), refEq(zero), refEq(transactionAmountMoney), refEq(zero));
@@ -260,8 +260,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         when(loanPaymentAllocationRule.getAllocationTypes()).thenReturn(List.of(PaymentAllocationType.DUE_PRINCIPAL));
         when(loanTransaction.isOn(transactionDate)).thenReturn(true);
 
-        underTest.processLatestTransaction(loanTransaction,
-                new TransactionCtx(currency, List.of(installment), Set.of(charge), new MoneyHolder(overpaidAmount), null));
+        underTest.processLatestTransaction(loanTransaction, new TransactionCtx(currency, List.of(installment), Set.of(charge),
+                new MoneyHolder(overpaidAmount), null, loan.getActiveLoanTermVariations()));
 
         Mockito.verify(installment, times(1)).payFeeChargesComponent(transactionDate, chargeAmountMoney);
         Mockito.verify(loanTransaction, times(1)).updateComponents(refEq(zero), refEq(zero), refEq(chargeAmountMoney), refEq(zero));
@@ -289,7 +289,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         installments.add(installment);
 
         // when
-        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null);
+        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null,
+                loan.getActiveLoanTermVariations());
         underTest.processCreditTransaction(chargebackTransaction, ctx);
 
         // verify principal
@@ -346,7 +347,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         installments.add(installment);
 
         // when
-        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null);
+        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null,
+                loan.getActiveLoanTermVariations());
         underTest.processCreditTransaction(chargebackTransaction, ctx);
 
         // verify charges on installment
@@ -398,7 +400,8 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         installments.add(installment2);
 
         // when
-        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null);
+        TransactionCtx ctx = new TransactionCtx(MONETARY_CURRENCY, installments, null, overpaymentHolder, null,
+                loan.getActiveLoanTermVariations());
         underTest.processCreditTransaction(chargebackTransaction, ctx);
 
         // verify principal
@@ -491,7 +494,7 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
 
         // Set up TransactionCtx with installments and charges
         TransactionCtx ctx = new ProgressiveTransactionCtx(currency, installments, Set.of(), overpaymentHolder, changedTransactionDetail,
-                model, null);
+                model, loan.getActiveLoanTermVariations());
 
         // Mock additional necessary methods
         LoanCharge loanCharge = mock(LoanCharge.class);
@@ -570,7 +573,7 @@ class AdvancedPaymentScheduleTransactionProcessorTest {
         when(model.getMaturityDate()).thenReturn(LocalDate.of(2023, 12, 31));
 
         TransactionCtx ctx = new ProgressiveTransactionCtx(currency, spyInstallments, Set.of(), new MoneyHolder(Money.zero(currency)),
-                mock(ChangedTransactionDetail.class), model, Money.zero(currency));
+                mock(ChangedTransactionDetail.class), model, Money.zero(currency), loan.getActiveLoanTermVariations());
 
         underTest.processLatestTransaction(disbursementTransaction, ctx);
 

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/domain/LoanAccountDomainServiceJpa.java

@@ -189,10 +189,11 @@ public class LoanAccountDomainServiceJpa implements LoanAccountDomainService {
         }
 
         Money totalInterest = interestRefundService.totalInterestByTransactions(null, loan.getId(), refundTransaction.getTransactionDate(),
-                List.of(), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList());
+                List.of(), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList(),
+                loan.getActiveLoanTermVariations());
         Money newTotalInterest = interestRefundService.totalInterestByTransactions(null, loan.getId(),
                 refundTransaction.getTransactionDate(), List.of(refundTransaction),
-                loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList());
+                loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList(), loan.getActiveLoanTermVariations());
         BigDecimal interestRefundAmount = totalInterest.minus(newTotalInterest).getAmount();
 
         if (MathUtil.isZero(interestRefundAmount)) {
@@ -846,12 +847,13 @@ public class LoanAccountDomainServiceJpa implements LoanAccountDomainService {
         if (processLatest) {
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), refundTransaction,
                     new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
             loan.getLoanTransactions().add(refundTransaction);
             if (interestRefundTransaction != null) {
                 loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(),
-                        interestRefundTransaction, new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(),
-                                loan.getActiveCharges(), new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                        interestRefundTransaction,
+                        new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
+                                new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
                 loan.addLoanTransaction(interestRefundTransaction);
             }
         } else {

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/rescheduleloan/service/LoanRescheduleRequestWritePlatformServiceImpl.java

@@ -444,11 +444,6 @@ public class LoanRescheduleRequestWritePlatformServiceImpl implements LoanResche
             } else {
                 loanSchedule.updateLoanSchedule(loan, loanScheduleDTO.getLoanScheduleModel());
             }
-            loanAccrualsProcessingService.reprocessExistingAccruals(loan, true);
-            loanChargeService.recalculateAllCharges(loan);
-            reprocessLoanTransactionsService.reprocessTransactions(loan);
-
-            this.loanRepaymentScheduleHistoryRepository.saveAll(loanRepaymentScheduleHistoryList);
 
             loan.updateRescheduledByUser(appUser);
             loan.updateRescheduledOnDate(DateUtils.getBusinessLocalDate());
@@ -456,6 +451,12 @@ public class LoanRescheduleRequestWritePlatformServiceImpl implements LoanResche
             // update the status of the request
             loanRescheduleRequest.approve(appUser, approvedOnDate);
 
+            loanAccrualsProcessingService.reprocessExistingAccruals(loan, true);
+            loanChargeService.recalculateAllCharges(loan);
+            reprocessLoanTransactionsService.reprocessTransactions(loan);
+
+            this.loanRepaymentScheduleHistoryRepository.saveAll(loanRepaymentScheduleHistoryList);
+
             Optional<LocalDate> lastTransactionDateForReprocessing = loanTransactionRepository.findLastTransactionDateForReprocessing(loan);
             if (lastTransactionDateForReprocessing.isPresent()) {
                 loanLifecycleStateMachine.determineAndTransition(loan, lastTransactionDateForReprocessing.get());

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanReadPlatformServiceImpl.java

@@ -2244,9 +2244,11 @@ public class LoanReadPlatformServiceImpl implements LoanReadPlatformService, Loa
 
         final InterestRefundService interestRefundService = interestRefundServiceDelegate.lookupInterestRefundService(loan);
         final Money totalInterest = interestRefundService.totalInterestByTransactions(null, loan.getId(), targetTxn.getTransactionDate(),
-                List.of(), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList());
+                List.of(), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList(),
+                loan.getActiveLoanTermVariations());
         final Money newTotalInterest = interestRefundService.totalInterestByTransactions(null, loan.getId(), targetTxn.getTransactionDate(),
-                List.of(targetTxn), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList());
+                List.of(targetTxn), loan.getLoanTransactions().stream().map(AbstractPersistableCustom::getId).toList(),
+                loan.getActiveLoanTermVariations());
         final BigDecimal interestRefundAmount = totalInterest.minus(newTotalInterest).getAmount();
         final Collection<PaymentTypeData> paymentTypeOptions = paymentTypeReadPlatformService.retrieveAllPaymentTypes();
         final LoanTransactionEnumData transactionType = LoanEnumerations.transactionType(LoanTransactionType.INTEREST_REFUND);

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanTransactionProcessingServiceImpl.java

@@ -211,7 +211,7 @@ public class LoanTransactionProcessingServiceImpl implements LoanTransactionProc
         ProgressiveLoanInterestScheduleModel model = savedModel.get();
         ProgressiveTransactionCtx progressiveContext = new ProgressiveTransactionCtx(loan.getCurrency(),
                 loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(), new MoneyHolder(loan.getTotalOverpaidAsMoney()),
-                new ChangedTransactionDetail(), model, getTotalRefundInterestAmount(loan));
+                new ChangedTransactionDetail(), model, getTotalRefundInterestAmount(loan), loan.getActiveLoanTermVariations());
         progressiveContext.getAlreadyProcessedTransactions().addAll(loanTransactionService.retrieveListOfTransactionsForReprocessing(loan));
         progressiveContext.setChargedOff(loan.isChargedOff());
         progressiveContext.setWrittenOff(loan.isClosedWrittenOff());

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/LoanWritePlatformServiceJpaRepositoryImpl.java

@@ -964,8 +964,9 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
         if (isTransactionChronologicallyLatest && (!reprocess || !loan.isInterestBearingAndInterestRecalculationEnabled())
                 && !loan.isForeclosure()) {
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(),
-                    newInterestPaymentWaiverTransaction, new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(),
-                            loan.getActiveCharges(), new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                    newInterestPaymentWaiverTransaction,
+                    new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
 
             reprocess = false;
             if (loan.isInterestBearingAndInterestRecalculationEnabled()) {
@@ -2993,7 +2994,7 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
         if (processLatest) {
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), interestRefundTxn,
                     new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
             loan.addLoanTransaction(interestRefundTxn);
         } else {
             if (loan.isCumulativeSchedule() && loan.isInterestBearingAndInterestRecalculationEnabled()) {
@@ -3053,7 +3054,7 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
             loan.addLoanTransaction(chargebackTransaction);
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), chargebackTransaction,
                     new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
         }
         loanLifecycleStateMachine.determineAndTransition(loan, chargebackTransaction.getTransactionDate());
     }
@@ -3253,7 +3254,7 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
             loan.addLoanTransaction(loanTransaction);
             loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), loanTransaction,
                     new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                            new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
         }
         loanBalanceService.updateLoanSummaryDerivedFields(loan);
         loanLifecycleStateMachine.transition(LoanEvent.WRITE_OFF_OUTSTANDING, loan);
@@ -3325,7 +3326,7 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
                 loan.addLoanTransaction(loanTransaction);
                 loanTransactionProcessingService.processLatestTransaction(loan.getTransactionProcessingStrategyCode(), loanTransaction,
                         new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                                new MoneyHolder(loan.getTotalOverpaidAsMoney()), null));
+                                new MoneyHolder(loan.getTotalOverpaidAsMoney()), null, loan.getActiveLoanTermVariations()));
 
                 loanBalanceService.updateLoanSummaryDerivedFields(loan);
             } else if (totalOutstanding.isGreaterThanZero()) {

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/ProgressiveLoanInterestRefundServiceImpl.java

@@ -35,6 +35,7 @@ import org.apache.fineract.portfolio.loanaccount.data.ScheduleGeneratorDTO;
 import org.apache.fineract.portfolio.loanaccount.data.TransactionChangeData;
 import org.apache.fineract.portfolio.loanaccount.domain.ChangedTransactionDetail;
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanTermVariations;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanTransaction;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanTransactionType;
 import org.apache.fineract.portfolio.loanaccount.domain.transactionprocessor.LoanRepaymentScheduleTransactionProcessor;
@@ -119,8 +120,10 @@ public class ProgressiveLoanInterestRefundServiceImpl implements InterestRefundS
     @Override
     @Transactional(readOnly = true, propagation = Propagation.REQUIRES_NEW)
     public Money totalInterestByTransactions(LoanRepaymentScheduleTransactionProcessor processor, final Long loanId,
-            LocalDate relatedRefundTransactionDate, List<LoanTransaction> newTransactions, List<Long> oldTransactionIds) {
+            LocalDate relatedRefundTransactionDate, List<LoanTransaction> newTransactions, List<Long> oldTransactionIds,
+            List<LoanTermVariations> activeLoanTermVariations) {
         Loan loan = loanAssembler.assembleFrom(loanId);
+        loan.setLoanTermVariations(activeLoanTermVariations);
         if (processor == null) {
             processor = loanTransactionProcessingService.getTransactionProcessor(loan.getTransactionProcessingStrategyCode());
         }

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/service/ReprocessLoanTransactionsServiceImpl.java

@@ -100,7 +100,7 @@ public class ReprocessLoanTransactionsServiceImpl implements ReprocessLoanTransa
 
                 final ProgressiveTransactionCtx progressiveTransactionCtx = new ProgressiveTransactionCtx(loan.getCurrency(),
                         loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(), new MoneyHolder(loan.getTotalOverpaidAsMoney()),
-                        new ChangedTransactionDetail(), savedModel.get());
+                        new ChangedTransactionDetail(), savedModel.get(), loan.getActiveLoanTermVariations());
                 progressiveTransactionCtx.setChargedOff(loan.isChargedOff());
                 progressiveTransactionCtx.setWrittenOff(loan.isClosedWrittenOff());
                 progressiveTransactionCtx.setContractTerminated(loan.isContractTermination());
@@ -108,7 +108,7 @@ public class ReprocessLoanTransactionsServiceImpl implements ReprocessLoanTransa
             }
         } else {
             transactionCtx = new TransactionCtx(loan.getCurrency(), loan.getRepaymentScheduleInstallments(), loan.getActiveCharges(),
-                    new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail());
+                    new MoneyHolder(loan.getTotalOverpaidAsMoney()), new ChangedTransactionDetail(), loan.getActiveLoanTermVariations());
         }
 
         final ChangedTransactionDetail changedTransactionDetail = loanTransactionProcessingService

integration-tests/src/test/java/org/apache/fineract/integrationtests/LoanRefundTransactionTest.java

@@ -18,6 +18,8 @@
  */
 package org.apache.fineract.integrationtests;
 
+import static org.junit.jupiter.api.Assertions.assertTrue;
+
 import io.restassured.builder.RequestSpecBuilder;
 import io.restassured.builder.ResponseSpecBuilder;
 import io.restassured.http.ContentType;
@@ -25,11 +27,15 @@ import io.restassured.specification.RequestSpecification;
 import io.restassured.specification.ResponseSpecification;
 import java.math.BigDecimal;
 import java.util.ArrayList;
+import java.util.concurrent.atomic.AtomicReference;
 import org.apache.fineract.client.models.GetLoansLoanIdResponse;
+import org.apache.fineract.client.models.PostCreateRescheduleLoansRequest;
+import org.apache.fineract.client.models.PostCreateRescheduleLoansResponse;
 import org.apache.fineract.client.models.PostLoanProductsResponse;
 import org.apache.fineract.client.models.PostLoansLoanIdTransactionsRequest;
 import org.apache.fineract.client.models.PostLoansLoanIdTransactionsResponse;
 import org.apache.fineract.client.models.PostLoansResponse;
+import org.apache.fineract.client.models.PostUpdateRescheduleLoansRequest;
 import org.apache.fineract.integrationtests.common.BusinessDateHelper;
 import org.apache.fineract.integrationtests.common.ClientHelper;
 import org.apache.fineract.integrationtests.common.LoanRescheduleRequestHelper;
@@ -153,6 +159,65 @@ public class LoanRefundTransactionTest extends BaseLoanIntegrationTest {
         });
     }
 
+    @Test
+    public void testMerchantIssuedRefundAndCreditBalanceRefundWithAdjustSchedule() {
+        final AtomicReference<Long> loanIdRef = new AtomicReference<>();
+
+        runAt("24 September 2025", () -> {
+            final Long clientId = clientHelper.createClient(ClientHelper.defaultClientCreationRequest()).getClientId();
+            final Long loanId = createLoanForRefundWithInterestRefund(clientId, "MERCHANT_ISSUED_REFUND", "24 September 2025", 116.89,
+                    35.99, 3);
+            loanIdRef.set(loanId);
+            disburseLoan(loanId, BigDecimal.valueOf(116.89), "24 September 2025");
+        });
+
+        runAt("26 September 2025", () -> {
+            executeInlineCOB(loanIdRef.get());
+            addRepaymentForLoan(loanIdRef.get(), 117.12, "26 September 2025");
+        });
+
+        runAt("06 October 2025", () -> {
+            executeInlineCOB(loanIdRef.get());
+            loanTransactionHelper.makeMerchantIssuedRefund(loanIdRef.get(), new PostLoansLoanIdTransactionsRequest()
+                    .dateFormat(DATETIME_PATTERN).transactionDate("06 October 2025").locale(LOCALE).transactionAmount(8.13));
+
+            GetLoansLoanIdResponse loanDetails = loanTransactionHelper.getLoanDetails(loanIdRef.get());
+            // Validate Loan is Overpaid
+            assertTrue(loanDetails.getStatus().getOverpaid());
+
+            validateLoanSummaryBalances(loanDetails, 0.00, 117.12, 0.00, 116.89, 8.14);
+        });
+
+        runAt("07 October 2025", () -> {
+            executeInlineCOB(loanIdRef.get());
+            loanTransactionHelper.makeCreditBalanceRefund(loanIdRef.get(), new PostLoansLoanIdTransactionsRequest()
+                    .dateFormat(DATETIME_PATTERN).transactionDate("07 October 2025").locale(LOCALE).transactionAmount(8.14));
+
+            GetLoansLoanIdResponse loanDetails = loanTransactionHelper.getLoanDetails(loanIdRef.get());
+            // Validate Loan is Closed
+            assertTrue(loanDetails.getStatus().getClosedObligationsMet());
+            validateLoanSummaryBalances(loanDetails, 0.00, 117.12, 0.00, 116.89, null);
+
+            PostCreateRescheduleLoansResponse rescheduleLoansResponse = loanRescheduleRequestHelper//
+                    .createLoanRescheduleRequest(new PostCreateRescheduleLoansRequest()//
+                            .loanId(loanIdRef.get())//
+                            .rescheduleReasonId(1L)//
+                            .rescheduleFromDate("25 September 2025").dateFormat(DATETIME_PATTERN).locale(LOCALE)//
+                            .submittedOnDate("07 October 2025")//
+                            .newInterestRate(BigDecimal.valueOf(25.99)));//
+
+            loanRescheduleRequestHelper.approveLoanRescheduleRequest(rescheduleLoansResponse.getResourceId(), //
+                    new PostUpdateRescheduleLoansRequest()//
+                            .approvedOnDate("07 October 2025").locale(LOCALE).dateFormat(DATETIME_PATTERN));//
+
+            loanDetails = loanTransactionHelper.getLoanDetails(loanIdRef.get());
+            // Validate Loan is Overpaid
+            assertTrue(loanDetails.getStatus().getOverpaid());
+
+            validateLoanSummaryBalances(loanDetails, 0.00, 117.06, 0.00, 116.89, 0.06);
+        });
+    }
+
     private Long createAndDisburseLoanForMerchantIssuedRefundWithInterestRefund(Long clientId) {
         return createAndDisburseLoanForRefundWithInterestRefund(clientId, "MERCHANT_ISSUED_REFUND");
     }