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Managing and controlling the non-performing loans


  • Define non-performing loans and the causes.
  • Identify the indicators of non-performing loans.
  • Explain the banking treatment of non-performing loans.
  • Explain the banking treatment of non-performing investment projects.
  • Monitor rescheduled non-performing loans.
  • Manage non-performing loans.
  • Explain the principles of borrower credit ratings and provisioning.
  • Identify the lessons learned from classified/non-performing loans.
  • Describe the legal aspects of working with non-performing loans.


Module 1:  Introduction to Non-performing loans

  • Introduction to the elements of credit
    • Element of uncertainty
    • Element of confidence
    • Element of time

    • Definition of non-performing loans
      • Non-performing projects
      • Non-performing borrowers

      • Causes of non-performing loans
        • Inappropriate financing tranches and/or credit facilities
        • Inadequate credit analysis
        • Defective loan monitoring
        • Disbursement problems

        • Lender causes
        • Borrower causes
        • Environmental causes


Module 2:  The Indicators of the Non-performing Loan

  • The four stages of the non-performing loan
    • Short-term liquidity problem
    • Long-term liquidity problem
    • Deteriorating financial structure
    • Complete failure

    • The indicators of non-performing loans in the financial statements
      • Income statement
      • Balance sheet
      • Financial ratios and indicators

      • Indicators of problem loans generated internally by clients’ accounts in banks
        • Borrower account movements
        • Analysis of the borrower’s goods and / or services
        • Analysis of the borrower’s guarantees
        • Analysis of unforeseen guarantees related to clients

        • Problem loan indicators generated from client information and field visits
        • The usage of the Eltman predictor


Module 3:  The Banking Treatment of Non-performing Loans

  • Strategies for dealing with non-performing loans
    • Liquidation
    • Settlement

    • Various scenarios for modifying the status of borrowers in default
      • Rescheduling the debt
      • Financial injection    
      • Equity participation
      • Settlement through reducing bank profitability


Module 4:  The Banking Treatment of Non-Performing Investment Projects

  • The treatment of failing projects due to the lack of a sound feasibility study
    • The cash injection method
    • Transitioning part of the frozen loans to equity participation
    • Recovering the non-performing loan by marketing the goods and services of the borrower in default


Module 5:  Monitoring Rescheduled Non-performing Loans

  • The importance of grading and sequencing when rescheduling non-performing loans
  • Rescheduling non-performing loan repayments
  • On-site monitoring


Module 6:  Managing Non-Performing Loans

  • Introduction to the management of non-performing loans
  • The functions and responsibilities of problem loan management
  • Procedures for transferring the borrower from performing loans to non performing loans


Module 7:  The Principles of Borrower Credit Ratings and Provisioning

  • Management of credit risk and borrower credit risk ratings
    • Credit risk management
    • The explanation of the Obligor Risk Rate (ORR)
    • Credit ratings and loan loss provisions   
    • The accounting treatment of irregular loan repayments
    • The rules for determining the fair market value of pledged mortgage collateral
    • The general rules for provisioning

    • Management of credit risk and the classification of consumer and residential mortgage loans


  • Credit risk management
  • Credit ratings, provisioning and the status of real estate
  • The accounting treatment of irregular returns and the general rules for provisioning

  • Credit risk management and the classification of small loans
    • Introduction
    • Credit risk management
    • Credit ratings and provisioning
    • The accounting treatment of loan repayments
    • General rules for provisioning


Module 8:  Lessons Learned from Classified Loans

  • The necessity of a credit policy approved by the board of directors
  • The necessity of a standardized credit information system
  •  The necessity of sound risk assessment
  • The necessity of regular document review and field loan monitoring
  • The importance of credit quality standards and sound credit analysis
  • Emphasis on collateral
  • The importance of resolving non-performing loans


Module 9:  Legal Aspects of Working with Non-performing Loans

  • The legal status of the borrower in default
  • Status of the defaulted borrower’s collateral

Who Should Attend

  • This course is intended for employees in project finance, lending and credit administration in banks and other financial institutions and internal audit staff.
  • Credit officers
  • Credit Risk Officers .
  • Credit Risk Seniors .
  • Accountants.
  • Financial analysis .
  • Auditors .
  • Operations supervisors.
  • Trade Finance officers .
  • The banking sector staff from modern and medium levels of expertise in credit facilities with various divisions: individuals facilities, corporate facilities, SMEs facilities,  and banking circles risk, credit operations and services, and treasury departments, and sales departments.


5 Days

Start Date End Date Country City

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