Five level classification of loans

The five level classification of loans refers to the five level classification of loan quality by commercial banks according to the borrower's actual repayment ability . That is, loans are divided into five categories according to the degree of risk ： normal 、 Focus on 、 secondary 、 Suspicious 、 Loss , The last three are non-performing loans .1998 year 5 month , The people's Bank of China shall refer to international practice , Combined with China's national conditions , Formulated the 《 Loan classification guidelines 》.

Early classification

1998 Years ago , The loan classification method of Chinese commercial banks basically follows that of the Ministry of finance 1993 enacted 《 Financial system of financial and insurance enterprises 》 The loan is divided into normal 、 Within the time limit 、 dull 、 Bad debts Four types , The latter three are collectively called non-performing loans , Abbreviation in China “ Stay for more than two ”. Overdue loans are loans that are overdue , As long as more than one day is overdue ; Sluggishness refers to the delay of two years or the cessation of business even though it is less than two years 、 Loans for the project ; Bad debts refer to those that have been determined to be uncollectible in accordance with the relevant provisions of the Ministry of finance , Loans that need to be written off against bad debt reserves . Most of the bad debt loans of Chinese commercial banks have formed a historical problem that should be written off but failed to be written off .
This classification method is simple and easy , Under the enterprise system and financial system at that time , It did play an important role , however , With the gradual deepening of economic reform , The drawbacks of this approach are gradually emerging , It can no longer meet the needs of economic development and financial reform . For example, an undue loan , Whether or not there is actually a problem , Are considered normal , Obviously the criteria are not clear , Another example , It seems too strict to classify loans that are one day overdue as non-performing loans . In addition, this method is a kind of post management , Only if the loan term is exceeded , Will be shown as non-performing loans in the bank's accounts . therefore , It is important to improve the quality of bank loans . Take certain protective measures for problematic loans in advance , Is often powerless . So as the problem of non-performing loans becomes more and more serious , This kind of classification method has also reached the point that it must be changed .

Current classification

Normal loans

The borrower is able to perform the contract , Have been able to pay the principal and interest normally , There are no negative factors that affect the timely and full repayment of the loan principal and interest , The bank is fully confident that the borrower will repay the loan principal and interest in full and on time . The probability of loan loss is 0.

Focus on loans

Although the borrower is able to repay the loan principal and interest , However, there are some factors that may adversely affect the repayment , If these factors continue , The borrower's ability to repay is affected , The probability of loan loss will not exceed 5%.

Subprime loans

There are obvious problems in the borrower's repayment ability , The loan principal and interest cannot be repaid in full by relying solely on its normal operating income , It is necessary to repay interest by disposing of assets or external financing or even executing mortgage guarantee . The probability of loan loss is 30%-50%.

Suspicious loans

The borrower cannot repay the loan principal and interest in full , Even if the mortgage or guarantee is executed , It will certainly cause some losses , Just because there is a borrower restructuring 、 Merger and acquisition (m&a) 、 Merge 、 Collateral disposal and pending litigation are pending factors , The amount of the loss is uncertain , The probability of loan loss is 50%-75% Between .

Loss loan

It refers to the possibility that the borrower has repaid the principal and interest free of charge , No matter what measures are taken and what procedures are performed , Loans are doomed to loss , Or although it can recover a small part , But its value is also very small , From the bank's point of view , There is no sense and necessity to keep it as a bank asset in the accounts , Such loans shall be written off immediately after the necessary legal procedures have been performed , The probability of loan loss is 75%-100%.