Non-performing loans

Loans that have faltered, like wilted flowers in a once-thriving garden, characterized by borrowers who have failed to make the required interest or principal payments for a specified period, indicating potential financial distress and an increased risk of default.

Example

A bank may classify a loan as non-performing if the borrower has not made any scheduled payments for 90 days or more. Non-performing loans can negatively impact a lender's financial stability, as they represent a higher likelihood of default and a potential loss of revenue. To manage non-performing loans, financial institutions often employ collection strategies, loan restructuring, or asset recovery actions.