Understanding gross structure

Gross structure is a method of combination, in which the gross credit and debit balances are used to determine the interest applied on the pool or group. The bank interest earned or paid for the pool is determined by this gross credit or debit balances of the pool respectively.

For a gross structure, the pool receives and pays bank interest simultaneously.

For a gross structure, the accounts and sub-groups in the structure with credit balances contribute to the gross credit balance at the next higher hierarchy and receive credit apportionment from the paired node.

The accounts and sub-groups in the structure with debit balances contribute to the gross debit balance at the next higher hierarchy and receive debit apportionment from the paired node.

A sample gross structure is illustrated below:

Assume the daily balances as mentioned in the following table:

Account	A/C 1	A/C 2	A/C 3	A/C 4	A/C 5	A/C 6	A/C 7	A/C 8	A/C 9	A/C 10
Balance	- 450000	200000	300000	- 250000	350000	- 350000	200000	- 600000	300000	200000

The interest rates, pool balances, and corresponding interest amounts are calculated in the following table:

Node	Gross Credit Balance	Gross debit balance	Credit interest rate	Credit interest amount	Debit interest rate	Debit interest amount
Pool	15,50000.00	-16,50000.00	3.0000%	127.40	2.6500%	-119.79

However to determine the benefit derived by operation of notional pool on gross structure, assuming that accounts receive and pay interest at the respective level, the benefit would be derived as under:

Account	Balance	Applicable Interest rate	Applicable Interest Amount
Account 1	-450000	2.7500%	-33.90
Account 2	200000	2.7500%	15.07
Account 3	300000	2.7500%	22.60
Account 4	-250000	3.0000%	-20.55
Account 5	350000	2.5000%	23.97
Account 6	-350000	3.0000%	-28.77
Account 7	200000	2.5000%	13.70
Account 8	-600000	3.0000%	-49.32
Account 9	300000	2.5000%	20.55
Account 10	200000	2.7500%	15.07

Therefore, the interest earned or paid by a client using gross structure in notional pooling is calculated in the following table:

	Credit	Debit
Applied Pool interest	127.40	-119.79

By operation of the notional pool for the day, the client earns Credit interest of 127.40 and Debit interest of -119.79.

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