Question & AnswerQ&A (BSP CIRCULAR NO. 248)
Non-performing loans are loan accounts whose principal and/or interest is unpaid for thirty (30) days or more after the due date or after they have become past due in accordance with existing rules and regulations.
The total outstanding balance of loans payable in lump sum or in quarterly, semi-annual, or annual installments shall be considered non-performing if principal and/or interest is unpaid for thirty (30) days or more after due date.
For loans payable in monthly installments, the entire outstanding balance shall be considered non-performing when three (3) or more installments are in arrears.
The entire outstanding balance of the loan shall be considered non-performing when the total amount of arrearages reaches ten percent (10%) of the total loan receivable balance.
Restructured loans shall be considered non-performing in accordance with existing rules and regulations.
All items in litigation as defined in the Manual of Accounts for Banks are considered non-performing loans.
The total outstanding balance is considered past due when minimum installments in arrears are met: monthly - 3 installments; quarterly - 1 installment; semi-annual - 1 installment; annual - 1 installment.
When the total amount of arrearages reaches twenty percent (20%) of the total outstanding balance of the loan/receivable, it is considered past due regardless of the number of installments in arrears.
For payments modes like daily, weekly, or semi-monthly, the entire outstanding balance is considered past due when arrearages reach ten percent (10%) of the total loan receivable balance.
'Installments' refer to principal and/or interest amortizations that are due on several dates as specified in the loan documents.