Detailed description:
1. First, when the borrower is 90 days overdue, the lending institution will convert the overdue loan into an impaired loan, that is, the loan that the lending institution thinks cannot be fully recovered.
2. Before 90 days in loans overdue, it was still regarded as normal principal, and the lending institution also pursued and collected it.
3. 90 days overdue is an important time node, because beyond this time limit, the lending institution believes that the borrower faces a high risk of default, which may lead to the inability to fully recover the loan.
4. When the normal principal is transferred to the subject of impaired loan principal, the lending institution will determine the impairment amount according to its internal risk assessment model.
5. The amount of impairment is usually calculated according to the borrower's default probability, risk exposure and recourse cost.
6. The lending institution will allocate the impairment amount from the normal principal to form an impairment loan principal account to reflect the actual risk exposure.
7. The purpose of this move is to enable lending institutions to assess the risks of their loan portfolios more accurately and take corresponding risk management measures.
Summary:
The transfer from the normal principal to the damaged loan principal shall be carried out 90 days after the borrower is overdue. 90 days overdue is an important time node. Lenders believe that beyond this period, borrowers will face a higher risk of default, which may lead to the inability to fully recover loans. Lenders will determine the impairment amount according to the internal risk assessment model, and allocate the impairment amount to form an impairment loan principal account to reflect the actual risk exposure.
Extended data:
The decision to convert normal principal into impaired loan principal is made by the lending institution according to its own business situation and risk management needs. Different lending institutions may have different overdue periods and impairment standards. 90 days overdue is a typical standard, but there are also cases where lending institutions set the overdue period to 60 days or 120 days. In addition, when determining the impairment amount, the lending institution will also consider the borrower's repayment ability, asset status, repayment willingness and other factors to comprehensively evaluate the borrower's default risk.
The above is the answer about changing normal principal into impaired loan principal, and I hope it will help you. If you have any other questions, please feel free to ask.