Problem loan or classified loan refers those loans that have pushed the bank’s financial position at stake usually due to the fact that, the borrower has missed one or more scheduled loan payments or the collateral behind the loan agreement has significantly declined in market value overtime. As we know, in granting loan each bank follws a specified a loan policy set out by the top officials in the bank. The loan applications are reviewed and the loan committee in the loan department tries to find out whether the loan application match the standard set the by bank for granting loan in terms of financial viability, maturity, types of loan applied for, nature of collateral promised to be pledged etc. after sanctioning loan bank’s credit department tries to establish a super visionary activity for the loan disbursed. Despite all of these safeguards most bank end up with situation where some of its loan granted becomes problem or distressed loan.
More from this Section
- Point-of-Sale Transfers
Point of sale transfers allows, the user to pay funds (transfer) from their account to the merchants account for retail purchases with an EFT (or debit) card.
Seignorage is the revenue a government receives by issuing money.
- Points quotation
Points quotation is a forward quotation expressed only as the number of decimal points (usually four decimal points) by which it differs from the spot quotation.
- Insufficient Funds
Insufficient Funds means when an account balance is inadequate to cover a cheque that has been written and presented for payment.
Imports are goods and services that a country buys from other countries.
- Cost-plus-profit deposit pricing
Cost-plus-profit deposit pricing is the charging customers for the full cost or a significant portion of the total cost of any deposit services they use.
- Glass-Steagall Act
Glass-Steagall Act is the law passed by the U.S. Congress in 1933 that legally mandated the separation commercial and investment