Outstanding can be classified as a potential bad loan if there is at least one of below mentioned criteria:
- Past-due under the Contract, from 5 (five) up to 90 (ninety) calendar days;
- Decrease of quarter revenue from the activity of the Customer of more than 15% in comparison with the same period (except the enterprises the activity of which has a seasonal pattern and credit except customers which are reviewed annually);
- Standard debt of the Customers who are a part of relating companies group, the outstanding of which is determined as a potential bad loan (relating customers according to the requirements of central bank);
- Deterioration of financial standing of the customer:
- worsening of the financing structure of the Customer;
- slowdown of indicators of the Customer business activity;
- occurrence of doubtful assets and income;
- different changes in assets structure of the Customer or significant increase of expenses/losses.
- Detection of cases of operational incidents concerning granting loans, determination of groups of relating borrowers; overestimation of collateral value, etc.;
- Non fulfillment of the Contract conditions or /and accessory obligations by the Customer;
- Detection of negative information of the Customer/Owners/Guarantor/Factor/Collateral provider (seizure of accounts, court proceeding, court enforcement action, initiated criminal case, etc.) and connection was lost with him (the owner was changed without agreement with the Bank, the customer didn’t provide necessary documents for the Bank);
- Making decision by the Bank on anticipated debt repayment by the Customer under the Contract in case of a negative circumstance (event of default); approval of new (making changes in the current ones) legislative-normative acts which can result in negative changes in the Customer’s activity;
- Remark concerning integrity and/or state of keeping collateral under the Contract and /or depreciation of collateral market value;
- Detection of insurance event regarding collateral;
- Detection of negative tendencies in the field where the Customer works (decrease of production volumes or sales/margin/introduction of legislative restrictions/embargo, etc.).
Now you know what that is potential bad loan?