| Investment Dictionary: Non Performing Loan - NPL |
Loans that are in default or close to being in default.
Investopedia Says:
Many loans become non-performing after being in default for three months, but this can depend on the contract terms.
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| 5min Related Video: Non-performing loan |
| Wikipedia: Non-performing loan |
A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms.
“A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full” (IMF)
By Bank regulatory definition non-performing loans consist of a) other real estate owned which is that taken by foreclosure or a deed in lieu of foreclosure, b) loans that are 90 days or more past due and still accruing interest, and c) loans which have been placed on nonaccrual (i.e., loans for which interest is no longer accrued and posted to the income statement).
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