China has raised the restrictions on large state-owned banks, requiring the five largest domestic banks to keep the proportion of non-performing loans below 5% after financial restructuring.
Bad debt rate is the ratio of bad debts to total credit sales, and bad debt rate = annual bad debts/total credit sales.
There are two main dimensions to control the bad debt rate of banks. The first is the adjustment of bad debt rate by technical means, followed by continuous liquidity support. In fact, it is difficult for even the best financial institutions in the world to control their bad debt rate. If someone says that he really controls the bad debt rate below 3%, it is impossible. People of a certain scale can rarely do it, but in the medium and long term and on a larger scale, the probability is almost zero. In fact, financial institutions in the world will have a basic bad debt rate, that is, no matter what kind of financial institution you are, this bad debt rate level.
Now the bank's bad debt rate is controlled within 1%. In fact, there are many technical means at work. On the one hand, the denominator is enlarged and the risk is delayed. On the other hand, the risk adjustment of the five-level classification is constantly carried out, and the categories of concern in the five-level classification are squeezed as much as possible. In fact, there are many ways to deal with the bad debt rate of any bank. Enlarge the loan scale first, then upgrade it to five levels, or find a company to merge and reorganize. If the enterprise has bad debts, the bank will find other enterprises to collect them, and the bad debts will not be reflected. That man will help you pay back the money. Of course, the premise of these technical means is that there must be sufficient liquidity behind, and money can make loans bigger. You say you have 100 million, you are finished. Your liquidity can't be extended, and the bad debt rate will be high.