Non-Performing Loans (NPLs)

Non-Performing Loans (NPLs) are loans where borrowers have failed to make scheduled payments—such as interest or principal—for a set period, typically 90 days or more. Essentially, the borrower is struggling to repay the loan, making it risky for the lender. High levels of NPLs can signal financial distress within a bank or economy, as these loans often require lenders to set aside reserves or take losses. Managing NPLs is crucial for maintaining financial stability and the health of banking systems.