Doubtful Loan

Loan in which full repayment is considered uncertain. Some losses are expected. A loan classified as doubtful has all the characteristics of a Substandard loan (well-defined credit weaknesses), with the added characteristic that credit weaknesses make full collection or liquidation in full highly questionable and improbable. Fifty percent of loans classified as doubtful are deducted from adjusted bank capital in computing regulatory Capital Adequacy. See also Adversely Classified Assets.

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A loan where full repayment is questionable and uncertain. Degree of repayment of loans in question range from a complete loss to uncertain loss unless corrective actions are taken. Doubtful loans are usually non-performing loans on which interest is overdue and full collection of principal is uncertain.  

Investopedia Says:
A loan classified as doubtful has all the characteristics of a substandard loan and credit weakness making full collection questionable and improbable. Fifty per cent of loans classified as doubtful are deducted from adjusted bank capital in computing regulatory capital adequacy.

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