FINERACT-2232: Capitalized income - Add Capitalized income to Loan

fineract-accounting/src/main/java/org/apache/fineract/accounting/producttoaccountmapping/exception/ProductToGLAccountMappingInvalidException.java

@@ -29,7 +29,7 @@ public class ProductToGLAccountMappingInvalidException extends AbstractPlatformD
             final String actualAccountCategory, final String expectedAccountCategory) {
         super("error.msg." + paramName + ".invalid.account.type",
                 "Passed in GLAccount " + paramName + " with Id " + accountId + "maps to the account " + accountName + " of type "
-                        + actualAccountCategory + ", the expected account type was one among" + expectedAccountCategory,
+                        + actualAccountCategory + ", the expected account type was one among " + expectedAccountCategory,
                 paramName, accountId, accountName, actualAccountCategory, expectedAccountCategory);
     }
 }

fineract-core/src/main/java/org/apache/fineract/commands/service/CommandWrapperBuilder.java

@@ -3822,4 +3822,13 @@ public class CommandWrapperBuilder {
         this.href = "/v1/loans/external-id/" + loanExternalId + "/interest-pauses/" + variationId;
         return this;
     }
+
+    public CommandWrapperBuilder addCapitalizedIncome(final Long loanId) {
+        this.actionName = "CAPITALIZEDINCOME";
+        this.entityName = "LOAN";
+        this.entityId = loanId;
+        this.loanId = loanId;
+        this.href = "/loans/" + loanId;
+        return this;
+    }
 }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/data/loanproduct/DefaultLoanProduct.java

@@ -120,6 +120,7 @@ public enum DefaultLoanProduct implements LoanProduct {
     LP2_ADV_PYMNT_INT_DAILY_EMI_ACTUAL_ACTUAL_NO_INTEREST_RECALC_INT_REFUND_FULL_ZERO_INT_CHARGE_OFF, //
     LP2_ADV_PYMNT_INT_DAILY_EMI_ACTUAL_ACTUAL_NO_INTEREST_RECALC_INT_REFUND_FULL_ACC_MATUR_CHARGE_OFF, //
     LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_IR_DAILY_TILL_REST_FREQUENCY_DATE_LAST_INSTALLMENT, //
+    LP2_PROGRESSIVE_ADVANCED_PAYMENT_ALLOCATION_CAPITALIZED_INCOME, //
     ;
 
     @Override

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/factory/LoanProductsRequestFactory.java

@@ -1500,4 +1500,121 @@ public class LoanProductsRequestFactory {
                 .chargeOffFraudExpenseAccountId(accountTypeResolver.resolve(DefaultAccountType.CREDIT_LOSS_BAD_DEBT_FRAUD))//
                 .incomeFromChargeOffPenaltyAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_CHARGE_OFF));//
     }
+
+    public PostLoanProductsRequest defaultLoanProductsRequestLP2CapitalizedIncome() {
+        final String name = Utils.randomNameGenerator(NAME_PREFIX_LP2, 4);
+        final String shortName = Utils.randomNameGenerator(SHORT_NAME_PREFIX, 3);
+        final List<Integer> principalVariationsForBorrowerCycle = new ArrayList<>();
+        final List<Integer> numberOfRepaymentVariationsForBorrowerCycle = new ArrayList<>();
+        final List<Integer> interestRateVariationsForBorrowerCycle = new ArrayList<>();
+        final List<LoanProductChargeData> charges = new ArrayList<>();
+        final List<LoanProductChargeToGLAccountMapper> penaltyToIncomeAccountMappings = new ArrayList<>();
+        final List<LoanProductChargeToGLAccountMapper> feeToIncomeAccountMappings = new ArrayList<>();
+        final List<GetLoanPaymentChannelToFundSourceMappings> paymentChannelToFundSourceMappings = new ArrayList<>();
+        final GetLoanPaymentChannelToFundSourceMappings loanPaymentChannelToFundSourceMappings = new GetLoanPaymentChannelToFundSourceMappings();
+        loanPaymentChannelToFundSourceMappings.fundSourceAccountId(accountTypeResolver.resolve(DefaultAccountType.FUND_RECEIVABLES));
+        loanPaymentChannelToFundSourceMappings.paymentTypeId(paymentTypeResolver.resolve(DefaultPaymentType.MONEY_TRANSFER));
+        paymentChannelToFundSourceMappings.add(loanPaymentChannelToFundSourceMappings);
+
+        return new PostLoanProductsRequest()//
+                .name(name)//
+                .shortName(shortName)//
+                .description(DESCRIPTION_LP2)//
+                .enableDownPayment(true)//
+                .enableAutoRepaymentForDownPayment(true)//
+                .disbursedAmountPercentageForDownPayment(new BigDecimal(25))//
+                .fundId(FUND_ID)//
+                .startDate(null)//
+                .closeDate(null)//
+                .includeInBorrowerCycle(false)//
+                .currencyCode(CURRENCY_CODE)//
+                .digitsAfterDecimal(2)//
+                .inMultiplesOf(0)//
+                .installmentAmountInMultiplesOf(1)//
+                .useBorrowerCycle(false)//
+                .minPrincipal(100.0)//
+                .principal(1000.0)//
+                .maxPrincipal(10000.0)//
+                .minNumberOfRepayments(1)//
+                .numberOfRepayments(3)//
+                .maxNumberOfRepayments(30)//
+                .isLinkedToFloatingInterestRates(false)//
+                .minInterestRatePerPeriod((double) 0)//
+                .interestRatePerPeriod((double) 0)//
+                .maxInterestRatePerPeriod((double) 0)//
+                .interestRateFrequencyType(INTEREST_RATE_FREQUENCY_TYPE_MONTH)//
+                .repaymentEvery(15)//
+                .repaymentFrequencyType(REPAYMENT_FREQUENCY_TYPE_DAYS)//
+                .principalVariationsForBorrowerCycle(principalVariationsForBorrowerCycle)//
+                .numberOfRepaymentVariationsForBorrowerCycle(numberOfRepaymentVariationsForBorrowerCycle)//
+                .interestRateVariationsForBorrowerCycle(interestRateVariationsForBorrowerCycle)//
+                .amortizationType(AMORTIZATION_TYPE)//
+                .interestType(INTEREST_TYPE_DECLINING_BALANCE)//
+                .isEqualAmortization(false)//
+                .interestCalculationPeriodType(INTEREST_CALCULATION_PERIOD_TYPE_SAME_AS_REPAYMENT)//
+                .transactionProcessingStrategyCode(TRANSACTION_PROCESSING_STRATEGY_CODE)//
+                .daysInYearType(DAYS_IN_YEAR_TYPE)//
+                .daysInMonthType(DAYS_IN_MONTH_TYPE)//
+                .canDefineInstallmentAmount(true)//
+                .graceOnArrearsAgeing(3)//
+                .overdueDaysForNPA(179)//
+                .accountMovesOutOfNPAOnlyOnArrearsCompletion(false)//
+                .principalThresholdForLastInstallment(50)//
+                .allowVariableInstallments(false)//
+                .canUseForTopup(false)//
+                .isInterestRecalculationEnabled(false)//
+                .holdGuaranteeFunds(false)//
+                .multiDisburseLoan(true)//
+                .allowAttributeOverrides(new AllowAttributeOverrides()//
+                        .amortizationType(true)//
+                        .interestType(true)//
+                        .transactionProcessingStrategyCode(true)//
+                        .interestCalculationPeriodType(true)//
+                        .inArrearsTolerance(true)//
+                        .repaymentEvery(true)//
+                        .graceOnPrincipalAndInterestPayment(true)//
+                        .graceOnArrearsAgeing(true))//
+                .allowPartialPeriodInterestCalcualtion(true)//
+                .maxTrancheCount(10)//
+                .outstandingLoanBalance(10000.0)//
+                .charges(charges)//
+                .accountingRule(LOAN_ACCOUNTING_RULE)//
+                .fundSourceAccountId(accountTypeResolver.resolve(DefaultAccountType.SUSPENSE_CLEARING_ACCOUNT))//
+                .loanPortfolioAccountId(accountTypeResolver.resolve(DefaultAccountType.LOANS_RECEIVABLE))//
+                .transfersInSuspenseAccountId(accountTypeResolver.resolve(DefaultAccountType.TRANSFER_IN_SUSPENSE_ACCOUNT))//
+                .interestOnLoanAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME))//
+                .incomeFromFeeAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_INCOME))//
+                .incomeFromPenaltyAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_INCOME))//
+                .incomeFromRecoveryAccountId(accountTypeResolver.resolve(DefaultAccountType.RECOVERIES))//
+                .writeOffAccountId(accountTypeResolver.resolve(DefaultAccountType.WRITTEN_OFF))//
+                .overpaymentLiabilityAccountId(accountTypeResolver.resolve(DefaultAccountType.OVERPAYMENT_ACCOUNT))//
+                .receivableInterestAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_FEE_RECEIVABLE))//
+                .receivableFeeAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_FEE_RECEIVABLE))//
+                .receivablePenaltyAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_FEE_RECEIVABLE))//
+                .dateFormat(DATE_FORMAT)//
+                .locale(LOCALE_EN)//
+                .disallowExpectedDisbursements(true)//
+                .allowApprovedDisbursedAmountsOverApplied(true)//
+                .overAppliedCalculationType(OVER_APPLIED_CALCULATION_TYPE)//
+                .overAppliedNumber(OVER_APPLIED_NUMBER)//
+                .delinquencyBucketId(DELINQUENCY_BUCKET_ID.longValue())//
+                .goodwillCreditAccountId(accountTypeResolver.resolve(DefaultAccountType.GOODWILL_EXPENSE_ACCOUNT))//
+                .incomeFromGoodwillCreditInterestAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME_CHARGE_OFF))//
+                .incomeFromGoodwillCreditFeesAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_CHARGE_OFF))//
+                .incomeFromGoodwillCreditPenaltyAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_CHARGE_OFF))//
+                .paymentChannelToFundSourceMappings(paymentChannelToFundSourceMappings)//
+                .penaltyToIncomeAccountMappings(penaltyToIncomeAccountMappings)//
+                .feeToIncomeAccountMappings(feeToIncomeAccountMappings)//
+                .incomeFromChargeOffInterestAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME_CHARGE_OFF))//
+                .incomeFromChargeOffFeesAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_CHARGE_OFF))//
+                .chargeOffExpenseAccountId(accountTypeResolver.resolve(DefaultAccountType.CREDIT_LOSS_BAD_DEBT))//
+                .chargeOffFraudExpenseAccountId(accountTypeResolver.resolve(DefaultAccountType.CREDIT_LOSS_BAD_DEBT_FRAUD))//
+                .incomeFromChargeOffPenaltyAccountId(accountTypeResolver.resolve(DefaultAccountType.FEE_CHARGE_OFF))//
+                .capitalizedIncomeStrategy(PostLoanProductsRequest.CapitalizedIncomeStrategyEnum.EQUAL_AMORTIZATION)//
+                .capitalizedIncomeCalculationType(PostLoanProductsRequest.CapitalizedIncomeCalculationTypeEnum.FLAT)//
+                .capitalizedIncomeType(PostLoanProductsRequest.CapitalizedIncomeTypeEnum.INTEREST)
+                .deferredIncomeLiabilityAccountId(accountTypeResolver.resolve(DefaultAccountType.OVERPAYMENT_ACCOUNT))
+                .incomeFromCapitalizationAccountId(accountTypeResolver.resolve(DefaultAccountType.INTEREST_INCOME))
+                .enableIncomeCapitalization(true);//
+    }
 }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/factory/LoanRequestFactory.java

@@ -285,4 +285,9 @@ public class LoanRequestFactory {
         return new InterestPauseRequestDto().dateFormat(DATE_FORMAT).locale(DEFAULT_LOCALE).startDate(DEFAULT_TRANSACTION_DATE)
                 .endDate(DEFAULT_TRANSACTION_DATE);
     }
+
+    public static PostLoansLoanIdTransactionsRequest defaultCapitalizedIncomeRequest() {
+        return new PostLoansLoanIdTransactionsRequest().transactionDate(DEFAULT_TRANSACTION_DATE).dateFormat(DATE_FORMAT)
+                .locale(DEFAULT_LOCALE).note("Capitalized Income");
+    }
 }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/initializer/global/LoanProductGlobalInitializerStep.java

@@ -2405,6 +2405,22 @@ public class LoanProductGlobalInitializerStep implements FineractGlobalInitializ
         TestContext.INSTANCE.set(
                 TestContextKey.DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_IR_DAILY_TILL_REST_FREQUENCY_DATELAST_INSTALLMENT,
                 responseLoanProductsRequestLP2AdvancedpaymentInterest36030InterestRecalcDailyTillRestFrequencyDateLastInstallment);
+
+        final String name97 = DefaultLoanProduct.LP2_PROGRESSIVE_ADVANCED_PAYMENT_ALLOCATION_CAPITALIZED_INCOME.getName();
+        final PostLoanProductsRequest loanProductsRequestLP2ProgressiveAdvPaymentCapitalizedIncome = loanProductsRequestFactory
+                .defaultLoanProductsRequestLP2CapitalizedIncome()//
+                .name(name97)//
+                .transactionProcessingStrategyCode(ADVANCED_PAYMENT_ALLOCATION.getValue())//
+                .loanScheduleType("PROGRESSIVE") //
+                .paymentAllocation(List.of(//
+                        createPaymentAllocation("DEFAULT", "NEXT_INSTALLMENT"), //
+                        createPaymentAllocation("GOODWILL_CREDIT", "LAST_INSTALLMENT"), //
+                        createPaymentAllocation("MERCHANT_ISSUED_REFUND", "REAMORTIZATION"), //
+                        createPaymentAllocation("PAYOUT_REFUND", "NEXT_INSTALLMENT")));//
+        final Response<PostLoanProductsResponse> responseLoanProductsRequestLP2ProgressiveAdvPaymentCapitalizedIncome = loanProductsApi
+                .createLoanProduct(loanProductsRequestLP2ProgressiveAdvPaymentCapitalizedIncome).execute();
+        TestContext.INSTANCE.set(TestContextKey.DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_PROGRESSIVE_ADV_PYMNT_CAPITALIZED_INCOME,
+                responseLoanProductsRequestLP2ProgressiveAdvPaymentCapitalizedIncome);
     }
 
     public static AdvancedPaymentData createPaymentAllocation(String transactionType, String futureInstallmentAllocationRule,

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/stepdef/loan/LoanStepDef.java

@@ -3863,4 +3863,23 @@ public class LoanStepDef extends AbstractStepDef {
         assertNotNull(targetProduct.getInterestRecognitionOnDisbursementDate());
         assertThat(targetProduct.getInterestRecognitionOnDisbursementDate().toString()).isEqualTo(expectedValue);
     }
+
+    @And("Admin adds capitalized income with {string} payment type to the loan on {string} with {string} EUR transaction amount")
+    public void adminAddsCapitalizedIncomeToTheLoanOnWithEURTransactionAmount(final String transactionPaymentType,
+            final String transactionDate, final String amount) throws IOException {
+        final Response<PostLoansResponse> loanResponse = testContext().get(TestContextKey.LOAN_CREATE_RESPONSE);
+        final long loanId = loanResponse.body().getLoanId();
+
+        final DefaultPaymentType paymentType = DefaultPaymentType.valueOf(transactionPaymentType);
+        final Long paymentTypeValue = paymentTypeResolver.resolve(paymentType);
+
+        final PostLoansLoanIdTransactionsRequest capitalizedIncomeRequest = LoanRequestFactory.defaultCapitalizedIncomeRequest()
+                .transactionDate(transactionDate).transactionAmount(Double.valueOf(amount)).paymentTypeId(paymentTypeValue)
+                .externalId("EXT-CAP-INC-" + UUID.randomUUID());
+
+        final Response<PostLoansLoanIdTransactionsResponse> capitalizedIncomeResponse = loanTransactionsApi
+                .executeLoanTransaction(loanId, capitalizedIncomeRequest, "capitalizedIncome").execute();
+        testContext().set(TestContextKey.LOAN_CAPITALIZED_INCOME_RESPONSE, capitalizedIncomeResponse);
+        ErrorHelper.checkSuccessfulApiCall(capitalizedIncomeResponse);
+    }
 }

fineract-e2e-tests-core/src/test/java/org/apache/fineract/test/support/TestContextKey.java

@@ -145,6 +145,7 @@ public abstract class TestContextKey {
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_MULTIDISBURSE_EXPECT_TRANCHE = "loanProductCreateResponseLP2AdvancedPaymentInterestDailyEmi36030InterestRecalculationDailyMultidisburseExpectTranche";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_MULTIDISBURSE = "loanProductCreateResponseLP2AdvancedPaymentInterestRecalculationDailyEmi36030Multidisburse";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_EMI_360_30_INTEREST_RECALC_DAILY_CASH_ACCOUNTING_DISBURSEMENT_CHARGES = "loanProductCreateResponseLP2AdvancedPaymentInterestDailyEmi36030InterestRecalculationDailyCashBasedDisbursementCharge";
+    public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_PROGRESSIVE_ADV_PYMNT_CAPITALIZED_INCOME = "loanProductCreateResponseLP2ProgressiveAdvancedPaymentCapitalizedIncome";
     public static final String LP2_NO_INTEREST_RECALCULATION_CHARGEBACK_ALLOCATION_INTEREST_FIRST_RESPONSE = "loanProductCreateResponseLP2NoInterestRecalculationChargebackAllocationInterestFirst";
     public static final String LP2_NO_INTEREST_RECALCULATION_CHARGEBACK_ALLOCATION_PRINCIPAL_FIRST_RESPONSE = "loanProductCreateResponseLP2NoInterestRecalculationChargebackAllocationPrincipalFirst";
     public static final String DEFAULT_LOAN_PRODUCT_CREATE_RESPONSE_LP2_ADV_PYMNT_INTEREST_DAILY_INTEREST_RECALCULATION_ACCELERATE_MATURITY_CHARGE_OFF_BEHAVIOUR_LAST_INSTALLMENT_STRATEGY = "loanProductCreateResponseLP2AdvancedPaymentInterestDailyInterestRecalculationAccelerateMaturityChargeOffBehaviourLastInstallmentStrategy";
@@ -203,4 +204,5 @@ public abstract class TestContextKey {
     public static final String LOAN_WRITE_OFF_RESPONSE = "loanWriteOffResponse";
     public static final String LOAN_DELINQUENCY_ACTION_RESPONSE = "loanDelinquencyActionResponse";
     public static final String LOAN_TRANSACTION_RESPONSE = "loanTransactionResponse";
+    public static final String LOAN_CAPITALIZED_INCOME_RESPONSE = "loanCapitalizedIncomeResponse";
 }

fineract-e2e-tests-runner/src/test/resources/features/LoanCapitalizedIncome.feature

@@ -0,0 +1,23 @@
+@CapitalizedIncomeFeature
+Feature: Capitalized Income
+
+  Scenario: As a user I want to add capitalized income to a progressive loan after disbursement
+    When Admin sets the business date to "1 January 2024"
+    And Admin creates a client with random data
+    When Admin creates a fully customized loan with the following data:
+      | LoanProduct                                                    | submitted on date | with Principal | ANNUAL interest rate % | interest type | interest calculation period | amortization type  | loanTermFrequency | loanTermFrequencyType | repaymentEvery | repaymentFrequencyType | numberOfRepayments | graceOnPrincipalPayment | graceOnInterestPayment | interest free period | Payment strategy            |
+      | LP2_PROGRESSIVE_ADVANCED_PAYMENT_ALLOCATION_CAPITALIZED_INCOME | 1 January 2024    | 1000.0         | 0                      | FLAT          | SAME_AS_REPAYMENT_PERIOD    | EQUAL_INSTALLMENTS | 30                | DAYS                  | 30             | DAYS                   | 1                  | 0                       | 0                      | 0                    | ADVANCED_PAYMENT_ALLOCATION |
+    And Admin successfully approves the loan on "1 January 2024" with "1000" amount and expected disbursement date on "1 January 2024"
+    And Admin successfully disburse the loan on "1 January 2024" with "900" EUR transaction amount
+    Then Loan status will be "ACTIVE"
+    When Admin sets the business date to "2 January 2024"
+    And Admin adds capitalized income with "AUTOPAY" payment type to the loan on "2 January 2024" with "100" EUR transaction amount
+    Then Loan Transactions tab has the following data:
+      | Transaction date | Transaction Type   | Amount | Principal | Interest | Fees | Penalties | Loan Balance | Reverted |
+      | 01 January 2024  | Disbursement       | 900.0  | 0.0       | 0.0      | 0.0  | 0.0       | 900.0        | false    |
+      | 01 January 2024  | Down Payment       | 225.0  | 225.0     | 0.0      | 0.0  | 0.0       | 675.0        | false    |
+      | 02 January 2024  | Capitalized Income | 100.0  | 100.0     | 0.0      | 0.0  | 0.0       | 775.0        | false    |
+    Then Loan Transactions tab has a "CAPITALIZED_INCOME" transaction with date "02 January 2024" which has the following Journal entries:
+      | Type      | Account code | Account name              | Debit  | Credit |
+      | ASSET     | 112601       | Loans Receivable          | 100.0  |        |
+      | LIABILITY | 145024       | Deferred Income           |        | 100.0  |

fineract-loan/src/main/java/org/apache/fineract/portfolio/loanaccount/api/LoanTransactionApiConstants.java

@@ -52,5 +52,6 @@ public interface LoanTransactionApiConstants {
         accrualActivity, //
         interestRefund, //
         accrualAdjustment, //
+        capitalizedIncome, //
     }
 }

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

@@ -306,6 +306,12 @@ public class LoanTransaction extends AbstractAuditableWithUTCDateTimeCustom<Long
         return newTransaction;
     }
 
+    public static LoanTransaction capitalizedIncome(final Loan loan, final Money amount, final PaymentDetail paymentDetail,
+            final LocalDate transactionDate, final ExternalId externalId) {
+        return new LoanTransaction(null, loan.getOffice(), LoanTransactionType.CAPITALIZED_INCOME, paymentDetail, amount.getAmount(),
+                transactionDate, externalId);
+    }
+
     public LoanTransaction copyTransactionPropertiesAndMappings() {
         LoanTransaction newTransaction = copyTransactionProperties(this);
         newTransaction.updateLoanTransactionToRepaymentScheduleMappings(loanTransactionToRepaymentScheduleMappings);

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

@@ -0,0 +1,53 @@
+/**
+ * Licensed to the Apache Software Foundation (ASF) under one
+ * or more contributor license agreements. See the NOTICE file
+ * distributed with this work for additional information
+ * regarding copyright ownership. The ASF licenses this file
+ * to you under the Apache License, Version 2.0 (the
+ * "License"); you may not use this file except in compliance
+ * with the License. You may obtain a copy of the License at
+ *
+ * http://www.apache.org/licenses/LICENSE-2.0
+ *
+ * Unless required by applicable law or agreed to in writing,
+ * software distributed under the License is distributed on an
+ * "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+ * KIND, either express or implied. See the License for the
+ * specific language governing permissions and limitations
+ * under the License.
+ */
+package org.apache.fineract.portfolio.loanaccount.handler;
+
+import lombok.RequiredArgsConstructor;
+import org.apache.fineract.commands.annotation.CommandType;
+import org.apache.fineract.commands.handler.NewCommandSourceHandler;
+import org.apache.fineract.infrastructure.DataIntegrityErrorHandler;
+import org.apache.fineract.infrastructure.core.api.JsonCommand;
+import org.apache.fineract.infrastructure.core.data.CommandProcessingResult;
+import org.apache.fineract.portfolio.loanaccount.service.LoanWritePlatformService;
+import org.springframework.dao.DataIntegrityViolationException;
+import org.springframework.orm.jpa.JpaSystemException;
+import org.springframework.stereotype.Service;
+import org.springframework.transaction.annotation.Transactional;
+
+@Service
+@RequiredArgsConstructor
+@CommandType(entity = "LOAN", action = "CAPITALIZEDINCOME")
+public class AddCapitalizedIncomeCommandHandler implements NewCommandSourceHandler {
+
+    private final LoanWritePlatformService writePlatformService;
+    private final DataIntegrityErrorHandler dataIntegrityErrorHandler;
+
+    @Transactional
+    @Override
+    public CommandProcessingResult processCommand(final JsonCommand command) {
+
+        try {
+            return this.writePlatformService.addCapitalizedIncome(command.getLoanId(), command);
+        } catch (final JpaSystemException | DataIntegrityViolationException dve) {
+            dataIntegrityErrorHandler.handleDataIntegrityIssues(command, dve.getMostSpecificCause(), dve, "loan.capitalized.income",
+                    "Capitalized Income");
+            return CommandProcessingResult.empty();
+        }
+    }
+}

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

@@ -125,4 +125,6 @@ public interface LoanWritePlatformService {
     CommandProcessingResult undoChargeOff(JsonCommand command);
 
     CommandProcessingResult makeRefund(Long loanId, LoanTransactionType loanTransactionType, JsonCommand command);
+
+    CommandProcessingResult addCapitalizedIncome(Long loanId, JsonCommand command);
 }

fineract-loan/src/main/resources/db/changelog/tenant/module/loan/parts/1027_add_capitalized_income_transaction_type.xml

@@ -0,0 +1,34 @@
+<?xml version="1.0" encoding="UTF-8"?>
+<!--
+
+    Licensed to the Apache Software Foundation (ASF) under one
+    or more contributor license agreements. See the NOTICE file
+    distributed with this work for additional information
+    regarding copyright ownership. The ASF licenses this file
+    to you under the Apache License, Version 2.0 (the
+    "License"); you may not use this file except in compliance
+    with the License. You may obtain a copy of the License at
+
+    http://www.apache.org/licenses/LICENSE-2.0
+
+    Unless required by applicable law or agreed to in writing,
+    software distributed under the License is distributed on an
+    "AS IS" BASIS, WITHOUT WARRANTIES OR CONDITIONS OF ANY
+    KIND, either express or implied. See the License for the
+    specific language governing permissions and limitations
+    under the License.
+
+-->
+<databaseChangeLog xmlns="http://www.liquibase.org/xml/ns/dbchangelog"
+                   xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"
+                   xsi:schemaLocation="http://www.liquibase.org/xml/ns/dbchangelog http://www.liquibase.org/xml/ns/dbchangelog/dbchangelog-4.3.xsd">
+    <changeSet author="fineract" id="1">
+        <insert tableName="r_enum_value">
+            <column name="enum_name" value="transaction_type_enum"/>
+            <column name="enum_id" valueNumeric="35"/>
+            <column name="enum_message_property" value="Capitalized Income"/>
+            <column name="enum_value" value="Capitalized Income"/>
+            <column name="enum_type" valueBoolean="false"/>
+        </insert>
+    </changeSet>
+</databaseChangeLog>

fineract-provider/src/main/java/org/apache/fineract/accounting/journalentry/service/AccrualBasedAccountingProcessorForLoan.java

@@ -123,6 +123,47 @@ public class AccrualBasedAccountingProcessorForLoan implements AccountingProcess
             else if (transactionType.isInterestPaymentWaiver() || transactionType.isInterestRefund()) {
                 createJournalEntriesForInterestPaymentWaiverOrInterestRefund(loanDTO, loanTransactionDTO, office);
             }
+            // Handle Capitalized Income
+            if (transactionType.isCapitalizedIncome()) {
+                createJournalEntriesForCapitalizedIncome(loanDTO, loanTransactionDTO, office);
+            }
+        }
+    }
+
+    private void createJournalEntriesForCapitalizedIncome(final LoanDTO loanDTO, final LoanTransactionDTO loanTransactionDTO,
+            final Office office) {
+        // loan properties
+        final Long loanProductId = loanDTO.getLoanProductId();
+        final Long loanId = loanDTO.getLoanId();
+        final String currencyCode = loanDTO.getCurrencyCode();
+        // transaction properties
+        final String transactionId = loanTransactionDTO.getTransactionId();
+        final LocalDate transactionDate = loanTransactionDTO.getTransactionDate();
+        final BigDecimal principalAmount = loanTransactionDTO.getPrincipal();
+        final Long paymentTypeId = loanTransactionDTO.getPaymentTypeId();
+        GLAccountBalanceHolder glAccountBalanceHolder = new GLAccountBalanceHolder();
+
+        if (MathUtil.isGreaterThanZero(principalAmount)) {
+            populateCreditDebitMaps(loanProductId, principalAmount, paymentTypeId,
+                    AccrualAccountsForLoan.DEFERRED_INCOME_LIABILITY.getValue(), AccrualAccountsForLoan.LOAN_PORTFOLIO.getValue(),
+                    glAccountBalanceHolder);
+        }
+
+        // create credit entries
+        for (Map.Entry<Long, BigDecimal> creditEntry : glAccountBalanceHolder.getCreditBalances().entrySet()) {
+            if (MathUtil.isGreaterThanZero(creditEntry.getValue())) {
+                GLAccount glAccount = glAccountBalanceHolder.getGlAccountMap().get(creditEntry.getKey());
+                this.helper.createCreditJournalEntryForLoan(office, currencyCode, loanId, transactionId, transactionDate,
+                        creditEntry.getValue(), glAccount);
+            }
+        }
+        // create debit entries
+        for (Map.Entry<Long, BigDecimal> debitEntry : glAccountBalanceHolder.getDebitBalances().entrySet()) {
+            if (MathUtil.isGreaterThanZero(debitEntry.getValue())) {
+                GLAccount glAccount = glAccountBalanceHolder.getGlAccountMap().get(debitEntry.getKey());
+                this.helper.createDebitJournalEntryForLoan(office, currencyCode, loanId, transactionId, transactionDate,
+                        debitEntry.getValue(), glAccount);
+            }
         }
     }
 

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/api/LoanTransactionsApiResource.java

@@ -90,6 +90,7 @@ public class LoanTransactionsApiResource {
     public static final String REAGE = "reAge";
     public static final String REAMORTIZE = "reAmortize";
     public static final String UNDO_REAMORTIZE = "undoReAmortize";
+    public static final String CAPITALIZED_INCOME = "capitalizedIncome";
     private final Set<String> responseDataParameters = new HashSet<>(Arrays.asList("id", "type", "date", "currency", "amount", "externalId",
             LoanApiConstants.REVERSAL_EXTERNAL_ID_PARAMNAME, LoanApiConstants.REVERSED_ON_DATE_PARAMNAME));
 
@@ -526,6 +527,7 @@ public class LoanTransactionsApiResource {
             case accrualActivity -> LoanTransactionType.ACCRUAL_ACTIVITY;
             case interestRefund -> LoanTransactionType.INTEREST_REFUND;
             case accrualAdjustment -> LoanTransactionType.ACCRUAL_ADJUSTMENT;
+            case capitalizedIncome -> LoanTransactionType.CAPITALIZED_INCOME;
             default ->
                 throw new InvalidLoanTransactionTypeException("transaction", transactionTypeParam.name(), "Unknown transaction type");
         };
@@ -583,6 +585,8 @@ public class LoanTransactionsApiResource {
             commandRequest = builder.reAmortize(resolvedLoanId).build();
         } else if (CommandParameterUtil.is(commandParam, UNDO_REAMORTIZE)) {
             commandRequest = builder.undoReAmortize(resolvedLoanId).build();
+        } else if (CommandParameterUtil.is(commandParam, CAPITALIZED_INCOME)) {
+            commandRequest = builder.addCapitalizedIncome(resolvedLoanId).build();
         }
 
         if (commandRequest == null) {

fineract-provider/src/main/java/org/apache/fineract/portfolio/loanaccount/serialization/LoanTransactionValidator.java

@@ -69,6 +69,8 @@ import org.apache.fineract.portfolio.loanaccount.api.LoanApiConstants;
 import org.apache.fineract.portfolio.loanaccount.data.HolidayDetailDTO;
 import org.apache.fineract.portfolio.loanaccount.data.ScheduleGeneratorDTO;
 import org.apache.fineract.portfolio.loanaccount.domain.Loan;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanCapitalizedIncomeBalance;
+import org.apache.fineract.portfolio.loanaccount.domain.LoanCapitalizedIncomeBalanceRepository;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanCollateralManagement;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanDisbursementDetails;
 import org.apache.fineract.portfolio.loanaccount.domain.LoanEvent;
@@ -105,6 +107,7 @@ public final class LoanTransactionValidator {
     private final EntityDatatableChecksWritePlatformService entityDatatableChecksWritePlatformService;
     private final CalendarInstanceRepository calendarInstanceRepository;
     private final LoanDownPaymentTransactionValidator loanDownPaymentTransactionValidator;
+    private final LoanCapitalizedIncomeBalanceRepository loanCapitalizedIncomeBalanceRepository;
 
     private void throwExceptionIfValidationWarningsExist(final List<ApiParameterError> dataValidationErrors) {
         if (!dataValidationErrors.isEmpty()) {
@@ -1034,4 +1037,91 @@ public final class LoanTransactionValidator {
                     loan.getRescheduledOnDate());
         }
     }
+
+    public void validateCapitalizedIncome(final JsonCommand command, final Long loanId) {
+        final String json = command.json();
+        if (StringUtils.isBlank(json)) {
+            throw new InvalidJsonException();
+        }
+
+        final JsonElement element = this.fromApiJsonHelper.parse(json);
+        final Type typeOfMap = new TypeToken<Map<String, Object>>() {}.getType();
+        this.fromApiJsonHelper.checkForUnsupportedParameters(typeOfMap, json, getCapitalizedIncomeParameters());
+
+        LoanApplicationValidator.validateOrThrow("loan.capitalized.income", baseDataValidator -> {
+            final Loan loan = this.loanRepositoryWrapper.findOneWithNotFoundDetection(loanId, true);
+            validateLoanClientIsActive(loan);
+            validateLoanGroupIsActive(loan);
+
+            // Validate that loan is disbursed
+            if (!loan.isDisbursed()) {
+                baseDataValidator.reset().failWithCodeNoParameterAddedToErrorCode("capitalized.income.only.after.disbursement",
+                        "Capitalized income can be added to the loan only after Disbursement");
+            }
+
+            // Validate loan is progressive
+            if (!loan.isProgressiveSchedule()) {
+                baseDataValidator.reset().failWithCodeNoParameterAddedToErrorCode("not.progressive.loan");
+            }
+
+            // Validate income capitalization is enabled
+            if (!loan.getLoanProductRelatedDetail().isEnableIncomeCapitalization()) {
+                baseDataValidator.reset().failWithCodeNoParameterAddedToErrorCode("income.capitalization.not.enabled");
+            }
+
+            // Validate loan is active
+            if (!loan.getStatus().isActive()) {
+                baseDataValidator.reset().failWithCodeNoParameterAddedToErrorCode("not.active");
+            }
+
+            final LocalDate transactionDate = this.fromApiJsonHelper.extractLocalDateNamed("transactionDate", element);
+            baseDataValidator.reset().parameter("transactionDate").value(transactionDate).notNull();
+
+            // Validate transaction date is not before disbursement date
+            if (transactionDate != null && loan.getDisbursementDate() != null && transactionDate.isBefore(loan.getDisbursementDate())) {
+                baseDataValidator.reset().parameter("transactionDate").failWithCode("before.disbursement.date",
+                        "Transaction date cannot be before disbursement date");
+            }
+
+            final BigDecimal transactionAmount = this.fromApiJsonHelper.extractBigDecimalWithLocaleNamed("transactionAmount", element);
+            baseDataValidator.reset().parameter("transactionAmount").value(transactionAmount).notNull().positiveAmount();
+
+            // Validate total disbursement + capitalized income <= approved amount
+            if (transactionAmount != null) {
+                final BigDecimal totalDisbursed = loan.getDisbursedAmount();
+                final BigDecimal existingCapitalizedIncomeBalance = loanCapitalizedIncomeBalanceRepository.findAllByLoanId(loanId).stream()
+                        .map(LoanCapitalizedIncomeBalance::getAmount).reduce(BigDecimal.ZERO, BigDecimal::add);
+                final BigDecimal approvedAmount = loan.getApprovedPrincipal();
+                final BigDecimal newTotal = totalDisbursed.add(existingCapitalizedIncomeBalance).add(transactionAmount);
+
+                if (newTotal.compareTo(approvedAmount) > 0) {
+                    baseDataValidator.reset().parameter("transactionAmount").failWithCode("exceeds.approved.amount",
+                            "Sum of disbursed amount and capitalized income cannot exceed approved amount");
+                }
+            }
+
+            validatePaymentDetails(baseDataValidator, element);
+            validateNote(baseDataValidator, element);
+            validateExternalId(baseDataValidator, element);
+        });
+    }
+
+    private void validateNote(final DataValidatorBuilder baseDataValidator, final JsonElement element) {
+        final String note = this.fromApiJsonHelper.extractStringNamed("note", element);
+        if (StringUtils.isNotBlank(note)) {
+            baseDataValidator.reset().parameter("note").value(note).notExceedingLengthOf(1000);
+        }
+    }
+
+    private void validateExternalId(final DataValidatorBuilder baseDataValidator, final JsonElement element) {
+        final String externalId = this.fromApiJsonHelper.extractStringNamed("externalId", element);
+        if (StringUtils.isNotBlank(externalId)) {
+            baseDataValidator.reset().parameter("externalId").value(externalId).notExceedingLengthOf(100);
+        }
+    }
+
+    private Set<String> getCapitalizedIncomeParameters() {
+        return new HashSet<>(
+                Arrays.asList("transactionDate", "dateFormat", "locale", "transactionAmount", "paymentTypeId", "note", "externalId"));
+    }
 }

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

@@ -2996,6 +2996,53 @@ public class LoanWritePlatformServiceJpaRepositoryImpl implements LoanWritePlatf
                 .build();
     }
 
+    @Transactional
+    @Override
+    public CommandProcessingResult addCapitalizedIncome(final Long loanId, final JsonCommand command) {
+        loanTransactionValidator.validateCapitalizedIncome(command, loanId);
+
+        final Loan loan = loanAssembler.assembleFrom(loanId);
+        final AppUser currentUser = getAppUserIfPresent();
+        final Map<String, Object> changes = new LinkedHashMap<>();
+
+        // Create payment details
+        final PaymentDetail paymentDetail = this.paymentDetailWritePlatformService.createAndPersistPaymentDetail(command, changes);
+
+        // Validate cash payment if applicable
+        if (paymentDetail != null && paymentDetail.getPaymentType() != null && paymentDetail.getPaymentType().getIsCashPayment()) {
+            BigDecimal transactionAmount = command.bigDecimalValueOfParameterNamed("transactionAmount");
+            this.cashierTransactionDataValidator.validateOnLoanDisbursal(currentUser, loan.getCurrencyCode(), transactionAmount);
+        }
+
+        // Extract transaction details
+        final LocalDate transactionDate = command.localDateValueOfParameterNamed("transactionDate");
+        final BigDecimal transactionAmount = command.bigDecimalValueOfParameterNamed("transactionAmount");
+        final ExternalId txnExternalId = externalIdFactory.createFromCommand(command, "externalId");
+
+        // Create capitalized income transaction
+        final Money capitalizedIncomeAmount = Money.of(loan.getCurrency(), transactionAmount);
+        final LoanTransaction capitalizedIncomeTransaction = LoanTransaction.capitalizedIncome(loan, capitalizedIncomeAmount, paymentDetail,
+                transactionDate, txnExternalId);
+
+        // Update loan with capitalized income
+        capitalizedIncomeTransaction.updateLoan(loan);
+        loan.addLoanTransaction(capitalizedIncomeTransaction);
+        loanTransactionRepository.saveAndFlush(capitalizedIncomeTransaction);
+
+        // Update loan counters and save
+        loan.updateLoanScheduleDependentDerivedFields();
+
+        // Create note if provided
+        createNote(loan, command, changes);
+
+        // Post journal entries
+        final List<Long> existingTransactionIds = new ArrayList<>(loan.findExistingTransactionIds());
+        final List<Long> existingReversedTransactionIds = new ArrayList<>(loan.findExistingReversedTransactionIds());
+        journalEntryPoster.postJournalEntries(loan, existingTransactionIds, existingReversedTransactionIds);
+
+        return new CommandProcessingResultBuilder().withEntityId(loan.getId()).withEntityExternalId(loan.getExternalId()).build();
+    }
+
     public void handleChargebackTransaction(final Loan loan, LoanTransaction chargebackTransaction) {
         loanTransactionValidator.validateIfTransactionIsChargeback(chargebackTransaction);