In order to strengthen the credit management of the banking industry, improve the loan classification method and improve the quality of credit assets, the People's Bank of China has formulated the Guiding Principles for Loan Risk Classification (for Trial Implementation), which are hereby printed and distributed to you. Please report the problems in the trial to the People's Bank of China in time.
People's Bank of China
1April 20, 998
Guiding principles for loan classification (for Trial Implementation)
Chapter 1 loan classification objectives
Article 1 These Guiding Principles are formulated for the purpose of establishing a modern banking system, improving loan classification methods, strengthening bank credit management and improving the quality of credit assets.
Article 2 The loan classification mentioned in these Guidelines refers to the process of classifying loans into different grades according to the degree of risk. Through loan classification, the following objectives should be achieved:
(1) Revealing the actual value and risk degree of loans, and truly, comprehensively and dynamically reflecting the quality of loans.
(two) to find the problems existing in loan issuance, management, monitoring, collection and non-performing loan management, and strengthen credit management;
(3) Provide a basis for judging whether the provision for bad debts is sufficient.
Chapter II Classification Criteria for Loans
Article 3 To evaluate the quality of bank loans, the risk-based classification method (loan risk classification for short) shall be adopted, that is, loans shall be divided into five categories: normal, concerned, secondary, doubtful and loss. The latter three categories are collectively referred to as non-performing loans.
Article 4 The definitions of five types of loans are as follows:
Normal: The borrower can perform the contract and is fully confident to repay the loan principal and interest in full and on time.
Note: Although the borrower has the ability to repay the loan principal and interest at present, there are some factors that may adversely affect the repayment.
Secondary: The borrower's repayment ability has obvious problems, and it is no longer possible to guarantee the full repayment of principal and interest by relying on its normal operating income.
Suspicious: the borrower can't repay the principal and interest in full, even if the mortgage or guarantee is implemented, it will definitely cause certain losses.
Loss: After all possible measures and all necessary legal procedures have been taken, the principal and interest cannot be recovered, or only a small part can be recovered.
Article 5 Using the loan risk classification method to classify the loan quality is actually to judge the possibility that the borrower can repay the loan principal and interest in full and on time. The main factors to be considered include:
(1) The borrower's repayment ability;
(2) The repayment record of the borrower;
(3) the borrower's willingness to repay;
(4) loan guarantee;
(5) Legal liabilities for repayment of loans;
(6) Bank credit management.
The borrower's repayment ability is a comprehensive concept, including the borrower's cash flow, financial situation, non-financial factors affecting repayment ability and so on.
The borrower's repayment record can reflect the overdue status of the loan. The overdue status of loans should be regarded as an important factor in classification.
Article 6 Loans that need to be restructured shall be at least divided into small categories; If the restructured loan is still overdue, or the borrower is still unable to repay the loan, it should at least be classified as suspicious.
Restructuring loan refers to a loan whose contract terms are adjusted due to the borrower's financial situation deterioration or inability to repay.
If the loans that need to be restructured or the restructured loans have other more serious characteristics, they can be further adjusted with reference to Articles 4 and 5 of these Guiding Principles.
Article 7 Loans issued in violation of relevant national laws and regulations shall at least be classified as concerns.
Article 8 Loan risk classification is the minimum requirement for loan classification and the basis for judging the loan quality of commercial banks.
Chapter III Basic Requirements for Loan Classification
Article 9 Loan classification is an important part of strengthening credit management of commercial banks. In order to ensure the reliability of loan classification, commercial banks must also do at least the following six aspects:
(a) establish and improve the internal control system, improve the credit laws, regulations and methods;
(2) Establish an effective credit organization and management system;
(3) Separate loans;
(four) improve the credit file management system to ensure the continuity and integrity of the loan file;
(five) improve the management information system to ensure that the management can obtain important information about the loan situation in a timely manner;
(6) urging borrowers to provide true and accurate financial information.
Article 10 A commercial bank may directly adopt the loan risk classification standards stipulated in Chapter II of these Guidelines, or formulate a corresponding loan classification system according to these Guidelines and the needs of its own risk prevention and credit management.
The loan classification system developed by commercial banks should have a clear correspondence and conversion relationship with the loan risk classification adopted by the People's Bank of China, and report it to the People's Bank of China for the record.
Article 11 Commercial banks should strengthen the management of loan term while adopting the loan risk classification method. Overdue loans shall be counted and monitored according to the relevant provisions of the People's Bank of China.
Article 12 A commercial bank shall formulate clear policies and procedures for loan restructuring, and make clear and reasonable provisions on loan standards, methods and procedures for loan restructuring and loan management after restructuring.
Article 13 Commercial banks should formulate clear policies and procedures for the management and evaluation of mortgages and pledges. For the assessment of collateral, if there is a market, it shall be fixed according to the market price; In the absence of a market, reference should be made to the market price of similar collateral.
Article 14 A commercial bank should formulate a clear policy on the management of secured loans, and when classifying secured loans, it should fully consider the validity of the guarantee contract and the guarantor's ability to perform the guarantee responsibility.
Fifteenth when classifying loans, we should pay attention to:
(1) Taking the assessment of the borrower's repayment ability as the core, taking the borrower's normal operating income as the main repayment source of the loan and the loan guarantee as the secondary repayment source;
(2) The customer's credit rating cannot replace the loan classification, and the credit rating can only be used as a reference factor for loan classification.
Chapter IV Organization and Implementation of Loan Classification
Article 16 Commercial banks should classify all loans at least once every six months.
If the factors affecting the borrower's financial situation or loan repayment change significantly, the loan classification should be adjusted in time. We should closely monitor non-performing loans, re-examine the implementation of loan contracts and loan guarantees, and re-classify loans according to their risks.
Article 17 When classifying loans, commercial banks should follow the principle of internal control to ensure the independence, consistency and reliability of loan classification.
The senior management of commercial banks shall be responsible for the implementation of the loan classification system and the results of loan classification.
Article 18 Commercial banks should ensure that credit officers and loan classification examiners have the necessary knowledge of credit analysis and are familiar with the basic principles of loan classification. Training and necessary measures are needed to ensure the quality of loan classification.
Article 19 The internal reporting system of a commercial bank should clearly define the reporting relationship of loan classification, so as to ensure that the management can keep abreast of the loan quality and changes.
Twentieth credit personnel should fully grasp and be familiar with borrowers and loans, and have the responsibility to report the true situation of borrowers and loans in writing to the departments responsible for classification review.
Article 21 The internal audit department of a commercial bank shall regularly inspect and evaluate the implementation of the loan classification policies and procedures, and report the inspection results in writing to the superior bank or the board of directors.
Chapter V Supervision and Management of Loan Classification
Article 22 The People's Bank of China shall monitor the loan quality of commercial banks through on-site inspection and off-site monitoring.
Article 23 The People's Bank of China shall, in principle, conduct on-site inspection on the loan quality of commercial banks once a year, including special inspection and daily inspection; Commercial banks with major problems in loan quality will be subject to stricter supervision.
Article 24 When checking the loan quality of commercial banks, the People's Bank of China should not only classify the loan quality independently, but also evaluate its credit policy, credit management level, loan classification methods, classification procedures and results.
Article 25 Commercial banks shall submit loan classification data as required by the People's Bank of China.
Article 26 Loan losses and write-off of bad debts of commercial banks shall be disclosed in accordance with relevant laws and regulations.
Chapter VI Supplementary Provisions
Twenty-seventh "loans" in these guiding principles refer to all kinds of loans stipulated in the General Principles of Loans.
For direct credit substitution items in off-balance-sheet items, such as standby letter of credit, letter of guarantee, irrevocable loan commitment, etc., the classification method in these guidelines can be directly used; Please refer to these guiding principles for the classification of other credit projects.
Article 28 A commercial bank shall establish a loan bad debt reserve system according to prudent accounting principles, draw general bad debt reserves, and draw special bad debt reserves (including special bad debt reserves) according to loan classification results. See relevant regulations for the specific provision for bad debts.
Article 29 These Guidelines are applicable to all kinds of commercial banks.
Policy banks and other financial institutions engaged in credit business may establish their own classification system with reference to these guiding principles, but it shall not be lower than the standards and requirements stipulated in these guiding principles.
Thirtieth the guiding principles shall be interpreted by the People's Bank of China.
Article 31 These Guiding Principles shall be implemented as of the date of promulgation.
Attached:
Operating instructions for loan risk classification
The first part is the loan classification standard.
When understanding the loan risk classification standard, the key is to grasp the core of repayment possibility. The inherent risks and losses of loans are different, so the possibility of repayment is different. Loan risk classification is to classify loans into different grades according to the possibility of repayment and reveal the true value of loans.
1. The borrower of normal loan has been able to repay the principal and interest normally, and the bank is fully confident that the borrower will eventually repay the loan. All aspects of the situation are normal, and there are no negative factors that affect the timely and full repayment of loan principal and interest. There is no reason to suspect that the loan will suffer losses.
Second, there is no problem in paying attention to loan borrowers' repayment of loan principal and interest, but there are potential defects, which will affect loan repayment if they continue to exist. The characteristics of concern loans include:
(1) Changes in external environment such as macro-economy, market, and industry have an adverse impact on the borrower's business, which may affect the borrower's solvency. For example, the borrower's industry is on a downward trend;
(two) enterprise restructuring (such as separation, leasing, contracting, joint venture, etc.). ) may have an adverse impact on bank debt;
(3) Major adverse changes have taken place in the major shareholders, affiliated enterprises or parent-subsidiary companies of the borrower;
(four) some key financial indicators of the borrower, such as liquidity ratio, asset-liability ratio, sales profit rate, inventory turnover rate, etc., are lower than the industry average or have a great decline;
(5) The borrower fails to use the loan for the specified purpose;
(six) major adjustments to the fixed assets loan projects that are not conducive to loan repayment, such as the extension of the construction period of infrastructure projects or the adjustment of budgetary estimates;
(7) The borrower has poor repayment willingness and does not actively cooperate with the bank;
(8) The value of the loan collateral declines, or the bank loses control of the collateral;
(nine) the financial situation of the loan guarantor is in doubt;
(10) Banks lack effective supervision over loans;
(eleven) the bank credit file is incomplete and important documents are lost, which has a substantial impact on repayment;
(12) Violation of loan approval procedures, such as granting loans beyond authority.
Third, the defects of subprime loans are already obvious, and normal operating income is not enough to guarantee repayment. It needs to be repaid by selling, selling off assets or raising funds from outside, or even implementing mortgage guarantee. The characteristics of subprime loans include:
(1) It is difficult for borrowers to pay and obtain new funds;
(2) The borrower is unable to repay the debt to other creditors;
(three) the borrower's internal management problems have not been resolved, which hinders the timely and full repayment of debts;
(4) The borrower obtains the loan by improper means such as concealing the facts;
(five) the borrower's operating losses, net cash flow is negative;
(6) The borrower must seek repayment sources such as auction collateral and performance guarantee.
4. Suspicious loans will certainly cause certain losses, but due to the borrower's reorganization, merger, merger, collateral disposal, pending litigation and other factors, the amount of losses cannot be determined. The characteristics of suspicious loans include:
(1) The borrower is closed or semi-closed;
(two) loan projects, such as infrastructure projects in a suspended state;
(3) The borrower is insolvent;
(4) Enterprises evade bank debts by restructuring;
(5) The bank has resorted to the law to recover the loan;
(six) the loan is still overdue after the reorganization, or the principal and interest can not be repaid normally, and the repayment situation has not been significantly improved.
Five, the loan loss is most or all of the losses. The characteristics of loss loans include:
(1) The borrower and the guarantor are declared bankrupt according to law, but they are still unable to pay off the loan after legal repayment;
(two) the borrower died, or in accordance with the provisions of the General Principles of the Civil Law of People's Republic of China (PRC), declared missing or dead, and paid off with his property or inheritance, but failed to pay off the loan;
(3) The borrower suffers from major natural disasters or accidents, suffers huge losses and cannot obtain insurance compensation, and is really unable to repay part or all of the loan;
(four) overdue loan projects approved by the State Council;
(5) Although the loan enterprise has not gone bankrupt and its license has not been revoked by the administrative department for industry and commerce, it has already closed down or existed in name only;
(6) Due to historical reasons such as the planned economic system, the debtor's subject has disappeared and bank loans have been suspended.
The second part is the procedure and method of loan classification.
I. Procedures for loan classification The classification of loans from commercial banks by the People's Bank of China or the classification of loans from branches at the same level or the next level by the internal audit and supervision departments of commercial banks should generally be divided into the following three links according to the actual operation order:
(1) Evaluating the reliability and objectivity of the loan classification system and the loan classification process of the inspected bank.
The evaluation of the above contents is an important part of the quality inspection of special assets of the People's Bank of China, mainly to understand whether the bank loan classification system can truly reveal the true value of loans, whether it meets the minimum standards stipulated in the Guiding Principles, and whether it has a clear correspondence and conversion relationship with the loan risk method stipulated in the Guiding Principles.
The internal audit supervision department of commercial banks should mainly supervise the reliability and objectivity of the classification process.
(two) to understand the repayment record of the loan and determine the overdue status of the loan.
The loan repayment record is a comprehensive reflection of the borrower's repayment ability, repayment willingness and legal responsibility, showing the overdue situation of the loan principal and interest, and is an intuitive reflection of the loan quality. There are generally three kinds of repayment records: bad repayment records, overdue repayment of principal and interest; The loan principal and interest have not yet expired; The loan repayment record is good, and the borrower can repay the principal and interest. According to the Guiding Principles, loans can be preliminarily classified according to the repayment of principal and interest.
Generally, the classification of a single loan begins with judging the repayment record of the loan, but we should not judge the quality of the loan only by repaying the principal and interest, but analyze the factors that affect the repayment possibility. For example, a loan that repays the principal and interest within 30 days (including 30 days) overdue can be regarded as a normal loan, but if the borrower's financial situation is poor or the net cash flow is negative, the loan should be classified as a concern loan or below.
(three) to determine the possibility of loan repayment, and get the classification results. To determine the possibility of repayment, we should analyze the borrower's repayment ability, willingness to repay, legal responsibility for repayment, bank credit management, loan guarantee and so on.
To analyze the borrower's repayment ability, it is necessary to analyze the borrower's financial situation, cash flow and non-financial factors that affect the repayment ability. The borrower's repayment ability is the main factor that determines whether the loan principal and interest can be recovered in time. There are many non-financial factors that affect the borrower's repayment ability, including the borrower's operating conditions, external operating environment, loan industry, national risks and so on. The willingness to repay refers to the borrower's subjective desire to repay the principal and interest according to the contract.
There are many reasons why the legal responsibility for repayment is unclear. The main reasons are: the loan contract is incomplete, the meaning of repayment terms is unclear, or it is signed by unauthorized personnel.
Loan guarantee includes mortgage, pledge and guarantee of loan, which is the second repayment source of loan principal and interest repayment, and its importance is second only to the borrower's repayment ability. When the borrower's repayment ability has problems, the liquidity of loan collateral and pledge, the repayment ability and repayment willingness of the guarantor are very important.
The credit management of banks is directly related to the quality of loans. Generally speaking, the credit management level of banks should be considered as a whole factor when classifying. Loans issued by banks with poor credit management level or credit personnel with poor business quality should be mainly inspected.
In the process of classification, after determining the repayment record of the loan, the analysis of the above five factors has its own emphasis and a certain order. For example, for loans with good repayment records, the analysis of repayment willingness and the analysis of repayment legal liability can be put in a secondary position; For loans with poor repayment records, all factors should be analyzed. In any case, we must first judge the borrower's repayment ability.
In addition, when evaluating the borrower's repayment possibility, it is necessary to understand the purpose of the loan, the source of funds to repay the loan and the borrower's asset conversion cycle.
Second, the split method in loan classification In loan classification, it is often necessary to distinguish different situations and divide a loan into different grades. Split method is generally applicable to secured loans and credit loans issued by lenders facing liquidation. For example, a bank issues a credit loan to a borrower who faces liquidation. According to the estimation of the final result of liquidation, after the liquidation, at least 40% of the principal and interest of the loans issued by the bank can be compensated at most 65%, so 35% of the loans can be classified as losses, 25% as suspicious and 40% as secondary. For secured loans, similar principles can be adopted to split them.
The third part classifies different types of loans.
1. Consumer loans Consumer loans are small in amount and large in quantity, and lenders generally have no financial statements, so it is difficult for banks to grasp the financial status of borrowers. However, there is another feature of consumer loans, that is, the risk factors are relatively simple, which can be classified in batches according to the situation in loans overdue.
For housing mortgage loans, we can refer to the following methods for classification: if the loan principal or interest is in arrears for 6 times or more than 180 days, it is at least classified as secondary; Overdue repayment 12 times or more than 360 days, at least as a loss.
Credit card overdraft, please refer to the following methods to classify: if the loan principal or interest is in arrears for three times or more than 90 days, it is at least classified as a second-class category; Overdue repayment for 6 times or more than 180 days, at least as a loss.
Two, short-term loans, long-term loans and syndicated loans are short-term loans, mainly considering the borrower's short-term solvency, that is, the borrower's liquidity; At the same time, further analyze other factors such as cash flow.
For medium and long-term loans, the borrower's long-term solvency is mainly considered, the borrower's leverage ratio is analyzed, the rationality of its capital source structure is analyzed, and its economic base is evaluated. If the borrower has strong profitability and management ability, but the financial leverage is too high and the debt is too heavy, the loan should be classified as a concern.
For syndicated loans, the focus of the analysis is still the borrower's repayment ability.
Three. Compared with general loans, policy loans and special loans have great passive factors, which are not completely in line with commercial principles. The quality of these loans is relatively low. However, the classification of loans is essentially a judgment of the degree of risk and true value of loans, so no matter what the reasons and background of loans are, these reasons and backgrounds should not be the basis of loan classification, otherwise it will not reflect the true value of loans. Therefore, policy loans should be classified according to the standards determined in Chapter II of the Guiding Principles.
According to Article 41 of People's Republic of China (PRC) Commercial Bank Law, loans granted by wholly state-owned commercial banks to specific loan projects approved by the State Council will be exempted from classification because the State Council will take corresponding remedial measures to make up for the losses caused by the loans.
4. In the process of enterprise restructuring, the borrower's loan of "bankrupt and debt-abolished" enterprises is "fake bankruptcy and real debt-abolished", which poses a great threat to the security of bank credit assets. When classifying this kind of loans, inspectors should first fully and truly grasp the loan situation, and then proceed from the standard of loan classification, firmly grasp the core of repayment possibility, and analyze it in combination with specific conditions.
According to the different possibilities of loan repayment, loans can be divided into different grades, and the part that cannot be recovered by various means should be classified as "loss"; For the uncertain part, it is classified as "suspicious".
Verb (verb's abbreviation) Illegal loan Compared with ordinary loans, issuing illegal loans not only bears the normal risks due to loan business, but also bears additional legal risks, which magnifies the risks of loans and affects the normal repayment of loans, and the risks caused by some illegal behaviors are already very serious. Therefore, all illegal loans, even if the repayment of loans is fully guaranteed from the immediate point of view, should also be divided into the following concerns.
Illegal loans generally include: credit loans to related parties, guaranteed loans to related parties on conditions superior to similar loans, interest-bearing loans, illegal extension, violation of state foreign exchange management regulations, violation of interest rate regulations, and borrowers who do not have the qualifications and conditions stipulated in the General Rules for Loans.
The fourth part is the structure and elements of credit files.
The information of loan classification mainly comes from credit files. Generally speaking, credit files should cover at least the following six aspects:
First, the basic situation of customers, including:
(1) The name, address, enterprise type, industry, business scope and main business of the lender;
(2) Organizational structure, information of owners and senior managers, and information of affiliated institutions;
(3) The borrower's business history, credit rating and basic information of the guarantor.
Two. Financial information of the borrower and the guarantor, including:
(1) The borrower's balance sheet, income statement, cash flow statement, external audit report and other financial information such as the borrower's financing in other financial institutions;
(2) the guarantor's balance sheet, income statement, external audit report and other financial information.
Three. Important documents, including:
(a) the borrower's loan application;
(two) the bank credit investigation report and approval documents, including the feasibility analysis report of long-term loans, project approval documents and the approval documents of higher-level banks;
(3) Loan contract, credit line or letter of credit;
(4) Legal documents of loan guarantee, including mortgage contract, guarantee, collateral evaluation report, property title certificate and other property ownership certificates;
(5) The borrower also plans or promises to repay the loan.
4 letters, including records and memos of visits and inspections by loan officials.
5. Borrower's repayment record and bank dunning notice.
Six, the loan inspection report, including regular and irregular credit analysis report, internal audit report.
Banks should formulate a credit file management system and establish a complete file for each borrower. Loan officers have the responsibility to ensure the integrity and authenticity of customer credit files. If there is any omission, it should be explained in writing.
Inspectors should criticize the serious problems existing in bank credit files. Loans with unclear legal liabilities due to the missing or incorrect important legal documents (such as loan contracts and guarantee contracts) should at least be classified as concerns (including concerns).
Part V Other Issues
I. loan sampling method the loan classification process is a process of determining the true value of loans one by one. If the inspectors can't classify all the loans due to the limitation of time and manpower, they should adopt the judgment sampling method to select the classified samples, that is, according to personal experience and subjective judgment, the loans with greater risks should be selected first. Generally, the loan sample should include the following loan groups:
(1) All overdue loans, information loans, restructured loans, loans involving legal proceedings, and loans that are considered problematic by the internal audit or credit management department;
(2) Non-performing loans identified by the People's Bank of China in the latest inspection;
(3) related party loans;
(4) The Bank's internal rating is large loans of concern.
(5) Large loans newly issued in the past year;
(6) Loans exceeding a certain amount.
(7) Other loans.
When the People's Bank of China checks the loan quality of commercial banks, it can adjust the loan sampling ratio according to the loan quality and credit management level of commercial banks, but it should ensure that the reliability of the loan classification system, procedures and classification results of commercial banks can be judged. For banks with poor loan quality or low credit management level, the sampling ratio should be increased. The credit management department of a commercial bank shall classify all loans.
Second, how to test the implementation of loan classification standards by different banks or branches? A feasible method is to compare the classification results and reasons of the same borrower, the same loan or similar loans.
Three. Scope of application of loan risk classification The products of commercial banks include credit assets, investments and other assets, among which credit assets can be divided into credit to peers and credit to customers.
According to Article 28 of the Guiding Principles, loan risk classification is applicable to all kinds of loans and direct credit substitution projects in off-balance-sheet projects determined in the General Principles of Loans; The classification of other credit projects can be used for reference. The "other credit items" here include borrowing funds and acceptance bills of financial institutions. Therefore, according to this article, all credit assets of banks can be classified according to the loan risk classification method.