NPLs

Non-Performing Loans (NPLs) are loans where borrowers have failed to make scheduled payments—for example, missing several months of repayments. When a loan becomes non-performing, it indicates the borrower is having difficulty paying back, increasing the risk for the lender. High levels of NPLs can signal financial trouble within a bank or economy, as they mean more loans might not be recovered, affecting the institution’s stability and lending capacity. Managing NPLs involves work to recover money or restructure loans to prevent losses.