Loan Classification and Loan Loss Provision | कर्जा नोक्सानी व्यवस्था

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loan classification

Loan Classification

The bank loan can be classified into two types according to the overdue of the credit period. बैंकहरुले प्रवाह गरेको कर्जा/सापटको साँवा वा ब्याज भुक्तानी हुनुपर्ने भाखा नागेको अवधिका आधारमा सम्पूर्ण कर्जा सापटलाई देहाय बमोजिम वर्गीकरण गरिन्छ।

They are –

  1. Performing Loan (सक्रिय कर्जा)
  2. Non-performing loan (निष्कृय कर्जा) 

Performing Loan (सक्रिय कर्जा) 

  1. Pass Loan (असल कर्जा )
  2. Watchlist (सुक्ष्म निगरानी)

Non- Performing Loan (सक्रिय कर्जा) 

  1. Sub-standard (कमसल)
  2. Doubtful (शंकास्पद)
  3. Loss (खराब)

Loan Loss Provision (कर्जा नोक्सानी वापत कायम गर्नु पर्ने व्यवस्था )

Loan ClassificationMeaningProvision
Pass LoanNot overdue/Overdue up to 1 month
1%
WatchlistOverdue up to 3 month
i.e 1-3 months
5%
Sub-standardOverdue up to 6 months
i.e 3-6 months
25%
DoubtfulOverdue up to 1 year
i.e 6-12 months
50%
LossOverdue for more than 1 year100%
Restructuring and ReschedulingChanges made in loan timing (credit period) and terms and condition (other structure) in between12.5 % for Pass Loan
25% for substandard
50% for doubtful
100% for loss

Condition for watchlist (कुन अवस्थामा कर्जालाई watchlist मा राखिन्छ)

  • Overdue up to 3 months
  • Extending the loan period without renewing the loan
  • If the borrower has been listed in Non-performing loan in other B&FIs
  • If the borrower paying interest and fee but his project is continuously bearing negative cash flow for the last 2 years.
  • If a single bank advances the loan of the amount of 1 Arab (100 Crore). It should be consortium/syndicate loan [check the meaning below]
  • If NRB list the borrower in watchlist because his/her project does not fulfil the NRB standard

Condition of Pass Loan (कुन अवस्थाको कर्जालाई असल कर्जा भनिन्छ)

  • No overdue/overdue up to 1 month
  • Loan against the fixed deposit (FD)
  • Loan against government securities and Nepal Rastra Bank securities
  • Loan against gold and silver up to 10 lakhs

Condition of Loss Loan (कुन अवस्थाको कर्जालाई खराब कर्जा भनिन्छ)

  • The market price of the collateral cannot secure the loans
  • The debtor is bankrupt or has been declared to be bankrupt
  • The debtor disappears or is not identified
  • The loan is misused  (used for a different purpose)
  • A debtor who has been black-listed by the Credit Information Bureau (CIB).
  • The project/business is not in a condition to be operated or project/business is not in operation
  • If the debtor submits a double financial statement [see the meaning below] of the specific period of time.
  • The credit card loan is not written off within 90 days from the date of expiry of the deadline.

When to Restructure and Reschedule?

  • When a customer submits written action plan along with required documents
  • Bank should assure about he/she can repay the loan
  • Customer should pay at least 25% of total interest till the of application submission
  • Should be enough collateral

 

All restructuring is rescheduling but all rescheduling is not restructuring

Meanings

Consortium/Syndicate Loan – Consortium/Syndicate Loan is a system of jointly financing a single borrower. The involvement of more than one bank for lending to a single borrower.

Double Financial Statement – multiple financial statements of a single business. For example, the financial statement presented to the Tax office is different from what it is submitted to the bank.


Questions

1. What are the minimum provisions of the loan loss directed by the Nepal Rastra Bank direction No. 2 when overdue of the principle and interest of the loan?

(बैंकहरुले प्रवाह गरेको कर्जा/सापटको साँवा वा ब्याज भुक्तानीको भाखा नागेको अवधिका आधारमा सम्पूर्ण कर्जा सापटलाई नेपाल राष्ट्र बैंकको निर्देशिका नं २ मा भएको व्यवस्थाबारे लेख्नुस )