Non-Performing Loan

From Open Risk Manual


Non-Performing Loan (NPL) is a broad term used by financial institutions, denoting loans (or other similar credit) that are problematic in the sense that there is deviation from the contractual cash flows (repayments) associated with the loan or contract.


Issues and Challenges

  • Due to the very widespread use of lending / credit in different legal jurisdictions, accounting and regulatory regimes there is considerable diversity of definitions. The BIS Guidelines[1] is an attempt to harmonize the definitions of Non-Performing Exposure and Forbearance


  1. D403: Prudential treatment of problem assets - definitions of non-performing exposures and forbearance