Banking Exam Question - What are the NRB Directives about Classification of Debt / Settlement and Loan Loss Provision? Explain

Introduction - Classification of Debt / Settlement and Debt Damage System.
Directive has been issued by this bank using the authority given by the Nepal Rastra Bank Act, 2058, regarding the provision for the classification of loan flow due to "A", "b" and "c" category licensed institutions and the provision to maintain the possible potential loss.

1. Classification of loan settlement will be to be classified as per the basis of the period on the basis of the flow of interest / interest paid by the licensed entity licensed institutions.

1. Real (Pass): Do not dump and loans for loan remaining for 3 months.
2. Watch List: The point of view of the poor, but the late. Loans / Saturns mentioned in 1.1
3. Sub-standard: Debt / Saturn for more than 6 months for more than 6 months.
4. Doubtful: Debt / Saturn for a period of six months in excess of 6 months.
5.  Loss: Debt / Saturn for more than 1 year period.

The loans on real and micro monitoring have been defined as "Non-performing Loan", "Performing Loan" and recycled / restructured, reduced, suspicious and bad debt.