Non-performing assets of banks are also often called non-performing debts, the most important of which is non-performing loans, which refer to loans that bank customers cannot repay principal and interest on time and in quantity.
Non-performing assets mainly refer to non-performing loans, including overdue loans (overdue loans), sluggish loans (loans overdue for more than two years) and non-performing loans (loans that need to be written off and cannot be recovered). Others include real estate and other real estate portfolios.
Non-performing assets refer to assets that can not participate in the normal capital turnover of enterprises, such as long-term arrears of accounts receivable by debt units, sluggish backlog of materials purchased or produced by enterprises, and non-performing investments.
State-owned banks and state-owned enterprises may, after implementing the shareholding system reform and publicly issuing shares, consider selling part of the state equity, using the proceeds to write off non-performing assets and repay bank loans.
The division of non-performing assets by China Bank can be divided into two stages:
1. Before 1998, according to the regulations of the Ministry of Finance in 1988 Financial System of Financial and Insurance Enterprises, all banks were divided into four categories, commonly known as "one excess and two retention", namely "overdue", "sluggish" and "bad debts".
The loan loss reserve extracted by this method is only one kind of ordinary bad debt reserve, accounting for 1% of the total loan.
Second, after 1998, China classified assets into "normal", "concerned", "secondary", "suspicious" and "loss", that is, "five-level classification".
1In July, 1999, the central bank issued the Notice of the People's Bank of China on fully implementing the guiding principles of five-level loan classification and loan risk classification (for Trial Implementation).
According to the regulations of the People's Bank of China, the proportion of special reserve is usually: 2% for concern, 25% for sub-category, 50% for suspicion and 100% for loss. The latter three categories are non-performing assets.