Normal: The borrower can perform the contract, and there is no sufficient reason to suspect that the loan principal and interest cannot be repaid 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 has obvious problems in repayment ability, and cannot fully repay the loan principal and interest by relying entirely on its normal operating income. Even if the guarantee is implemented, it may cause certain losses.

Suspicious: the borrower can't repay the loan principal and interest in full, even if the guarantee is implemented, it will definitely cause great losses.

Loss: After taking all possible measures or all necessary legal procedures, the principal and interest are still unrecoverable, or only a small part can be recovered.

Extended data:

Early loan classification

Before 1998, the loan classification method of China commercial banks basically followed the provisions in the Financial System of Financial and Insurance Enterprises promulgated by the Ministry of Finance 1993, and classified loans into four categories: normal, overdue, sluggish and bad debts. The latter three types are collectively referred to as non-performing loans, which are referred to as "one excess and two retention" in China.

Overdue loans refer to overdue loans, which are overdue as long as they exceed one day; Sluggish refers to loans that are overdue for two years or less, but have stopped operating and the project has been dismounted; Bad debts refer to loans that cannot be recovered according to the relevant regulations of the Ministry of Finance and need to be written off. Most of the non-performing loans of China commercial banks have formed a historical problem that should be written off but not written off.

This classification method is simple and feasible, and it really played an important role under the enterprise system and financial system at that time. However, with the gradual deepening of economic reform, the disadvantages of this method have gradually emerged, which can no longer meet the needs of economic development and financial reform.

For example, an unexpired loan, whether there is a problem in fact, is regarded as normal, and the standard is obviously unknown. For another example, it seems too strict to classify a loans overdue day as a non-performing loan. In addition, this method is an after-the-fact management method, and only after the loan period is exceeded will it be shown as a non-performing loan in the bank account.

Therefore, it is very important to improve the quality of bank loans. It is often powerless to take certain protective measures in advance for problem loans. Therefore, with the outstanding problem of non-performing loans, this classification has reached the point where it must be changed.

Baidu Encyclopedia-Five Categories of Loans