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Classification of Loan Assets

Classification of Loan Assets

*Dr.P.Shanmukha Rao **Dr.N.V.S.Suryanarayana

The main function of the banking is to provide loans through various schemes acceptance of the deposits and to get interest from the prospective borrowers. Simultaneously the borrowers by having their required loans are starting their career and are being. In the same time unemployment problems are being solved to some extent. But if the banks after providing loans does not monitor or supervise the borrowers then many a times the loans become NPA(non-performing Assets). Under prudential norms, total advances or loans of a bank are classified under four segments depending on the performing of assets.Classification of Loan Assets Advances



Performing Assets Non-Performing Assets



Standard assets Weak Assets

sub-standard doubtful loss

assets assets assets



Performing assets:

Performing assets are assets, which do not carry any problems more than normal risk, attached to the business.

Standard assets:

Standard Assets are those, which do not disclose any problem and which do not carry more than normal risk attached to the business. These are performing assets. Further advances against 100% security by lien on terms deposits, national savings certificates (NSCs) eligible for surrender, indira vikaspatra, kisan vikas patra and LIC are to be classifies as standard assets and no provision as required in these accounts. The government guaranteed are exception in the sense that even when they are classified as NPA for the purpose of income recognition for the purpose of assets classification, they must be treated as standard Assets.

Weak standard assets:

The accounts having the following irregularities are being treated as weak standard Assets.




¨ Accounts where interest and installment have not been serviced for more than one quarter.

¨ Continuous over drawings.

¨ Development of letters of credit.

¨ Invocation of guarantees.

¨ Accounts overdue for more than 4 months.

¨ No operation in the account.
Non-performing assets:

Non- performing Assets are those loans given by a bank or financial institution where the borrower delays interest or principal payments. According to the RBI guidelines any loan repayment, which is delayed beyond 90 days, has to be identified as NPA. Banks are not allowed to book any income from NPA's. they have to make provisions for the NPA's or keep money a side, increase they can't collect from the borrower which affects profitability.

1. Sub standard assets:

Substandard assets are those, which have been classified as NPA for a period not exceeding two years. In such cases, the current net worth of borrower/guarantor or the current market value of the security charged to the bank is not enough recovery of dues in full. In other words such an asset will have well defined credit weaknesses that may jeopardize the recovery of the debt in full and there are district changes that the bank will sustain some loss, if the deficiencies are not corrected.

In case of term loans, where the terms of loan agreement regarding interest and principle have been renegotiated or rescheduled after commencement of production, should be classified as sub standard and should remain in such category for two years of satisfactory performing under the terms.

2. Doubtful assets:

Doubtful assets are assets, which have remained NPA for a period exceeding two years. As in the case of sub standard assets, here the rescheduling does not entitle a bank to upgrade the quality of the advance automatically. the loans of this category have all the weaknesses inherent in those classified as sub standard with the added characteristic that the weaknesses make collection in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. Depending upon the period for which, the loan assets has remained doubtful 20% to 50% of the secured on the following basis.

If Considered doubtful: Upto one year 20%. One to three years 30%.

More than three years 50%.

3. Loss assets:

A loss assets is one where loss has been identified by the bank or internal auditors or the RBI inspectors, but the amount has not been written off wholly or partly. In the other words such an assets is considered uncollectible and have such little value that its continuance as a bankable assets is not warranted, although there may be some salvage value or recovery.

The loss assets requires 100% provisioning, as the value of the security is negligible.

Steps Taken By Banks To Reduce The Level of Npa

The huge amount of NPA not only reduces the yield on advances the but also reduces the profitability of the banks. The steps taken by the banks to reduce the level of NPA could be classified into two categories, namely, legal measures and non-legal measures.

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About the Author

S.R.PADALA & NVS SURYANARAYANA

*Dr. SHANMUKHA PADALA : The author is a well qualified and posses Vast teaching experience in Field of Management. He has great interest in... (show bio)

How to Get Mortgage Loan Leads: The Top Ways to Generate Leads for Your Mortgage Loan Business

Generating leads is an important aspect of any business, and the mortgage industry is certainly no exception. So if you are a mortgage agent or broker looking for information on how to get mortgage loan leads, then you will need to understand the top methods for doing so as well as how they work and which will be the most effective for you and your mortgage loan business.

The 2 Most Common Ways to Generate Mortgage Loan Leads:

1- Off-line Advertising: Mortgage agents often utilize a variety of advertising techniques to generate leads for their business, one of them being the traditional offline methods of newspaper ads, direct mail post-card ads, radio and tv commercials and even billboards. When looking at how to get mortgage loan leads, you will need to consider where your budget is currently at and if it will allow the time and money that is necessary for this kind of advertising, since offline techniques are not usually cheap.

2- Lead-Generating Companies: Another method that agents may consider when looking at how to get mortgage loan leads, is the possibility of purchasing their leads through a lead generating company. There are many companies which claim to provide fresh, real-time leads at a variety of prices depending on the company. However, you should keep in mind, that while this method can sometimes be effective, the leads can not be guaranteed buyers and are often just casual prospects that filled out an online survey just for curiosity's sake.

The Most Effective Way to Generate Qualified Mortgage Loan Leads:

If you are looking at how to get mortgage loan leads, then it's safe to say that you don't want to play around with paying for uninterested leads, or leads that are not ready to buy now. And if that is the case, then you will want to look into utilizing the power of the internet to attract a more steady flow of truly interested mortgage loan leads that fit your criteria to become a permanent client.


If this is the case, then you will need to enroll in anInternet Marketing Mentoring and Coaching Center that will have the tools and resources necessary to train you in all the current Online Marketing techniques. This will help to set you apart from the competition and position you as a leader in the Mortgage industry so that you can attract a steady flow of traffic to your websites, using techniques such as keyword research and search engine optimization.

The techniques you need to learn for how to get mortgage loan leads are not difficult skills to master, but they are also not the type of thing to overlook if you really want your website and online marketing content to rank high in the search engines and be found by the greatest amount of potential mortgage loan leads as possible. So be sure not to overlook this!

Remember, that in order to truly attract the best mortgage loan leads it is absolutely critical that you receive on-going training from a qualified internet advertising and marketing system that will be able to help position you where you want to be in order to generate the best, highest-converting leads for your business.

Next, continue reading more about How to Get Mortgage Loan Leads by learning the top techniques and strategies that are necessary to attract and generate qualified leads to your business; fill out the form on the first page, follow the instructions that will be sent to your email and then watch the videos on step #2 and 3 of the second page to start learning the top techniques that you can start using now to promote your Mortgage Loan business and attract more Mortage Loan Leads today!

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About the Author

Shawn Stoik

Shawn Stoik is an Online Marketing Coach, Mentor and Corporate Trainer for what is arguably the World's Largest Internet Marketing School... (show bio)

Ideal Creation of a Loan Agreement Template

There are different ways for each individual or organization to create a loan agreement template. Ideally, the document is drawn up in front of a lawyer to ensure that the document contains valid details, terms, and conditions. Since it is not an accessible method for most people, you can draft your own loan agreement by following basic instructions on how to create one. Be advised though, that the structure of the details should be carefully considered not only the conditions themselves. This type of contract is deemed valid in court once signed so can therefore be a liability on your end if you cannot carry out the responsibility stated in the agreement.

Indeed, the world is within your reach nowadays. You can get anything and everything at a click of a button. Going into the internet provides you with the data you need without spending so much effort. You can surely obtain a loan agreement template from the World Wide Web. There are certain points, however, that you need to check before you formally use the document.

The following are points to include in the loan agreement you are drafting:
- Interest rate, if any
- Mode of payment of loan
- Schedule of payment if instalment method
- Due date of payment or instalment schedule
- Late fees and penalties when payment is delayed


There are cases wherein the loan agreement template was not drafted according to these agreements that the parties have made. Sometimes, these points are not included altogether. It is helpful to see the scheduled amount and date for referral of both lender and borrower. There would be no need for reminders or arguments over payments and late fees, for example.



Basic information you will find in a loan agreement template are the full names of both parties involved in the loan, their addresses, names of witnesses, and the lawyer who notarized the document. Terms and conditions should be specified in detail aside from the basic information since this is the area that both parties should abide by.

Secondary information may include the amount loaned, mode of payment, amount of scheduled payment if paid through instalments, due date for payment or scheduled payment. The document should also plainly state if there is any interest rate on top of the loanable amount. It is better to include a computation of payable amount with interest so that questions regarding the aspect can be resolved if conflicts come up. If details of computation pertain to amount of instalment payments, it is also good to include the computation for total amount to be paid with the interest.

Finally, penalties and other charges should be clearly stated in the document so that there will be guidelines on what needs to be done when the borrower fails to deliver his or her responsibilities.

Although these information or points seem pretty straightforward and memorable, oftentimes common individuals fail to include all data in their loan agreement template. It is best to take note of this guide so that you will have a solid contract to present to legal authorities if need be.

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About the Author

Gerri Mason

Gerri Mason is an author of diverse legal documentation. Due to his extensive research and work experience, he is able to share his in-depth... (show bio)

Cenlar Loan Modification Denied - What Should I Do Now?

So you've had your Cenlar loan modification denied and you're now having a panic attack. Your family home will be on course closer to the foreclosure process and the constant worry can be overpowering. If you happen to continue reading this article, you may save your family residence from the foreclosure sale.

Top Reasons For a Denial
Despite the fact that a loan modification is very much the greatest option around for households having to deal with economic difficulties, numerous individuals are not qualifying. At this time, you will discover quite a significant increasing number of individuals who have tried to file for a modification loan by themselves but without the appropriate advice and a comprehension of new legal guidelines and restrictions, these families were quickly denied for the modification. The most notable reasons for a loan modification denial are frequently as a consequence of insufficient data or for incorrectly submitting the necessary forms. There could be also more causes for rejection that you do not realize.

There's Still Hope
In the event you have had your Cenlar loan modification denied, there is still hope for turning your troubles around and protecting your family home from property foreclosure.The first task is to re-apply again, however, it is highly recommended that you use a specialist. Having a loan mod expert will not only minimize the strain in addition to the frustration of filing, but with their aid, the procedure could be more efficient and your probability of approval can be increased. They'll have the ability to understand why you had been denied earlier and explain what adjustments you need to make. Try to remember, these kinds of specialists talk your loan company's language and also have the knowledge and practical experience needed to ensure an approval.

Keep in mind that you need to first get yourself a totally free loan mod review so you can really feel comfortable using the specialist you may be working with. Try to remember, it is your home on the line and you need to make certain the specialist working as your representative can give you hands on courteous service. You deserves the most beneficial service so you are certainly not denied a Cenlar loan mod for a second time.

Where To Find Cenlar Loan Modification Help
The loan mod process can be frustrating and overwhelming. Having a specialist on your side can greatly reduce the stress, as they do all the negotiating and paperwork on your behalf. Visit best loan modification companies to learn why having a loan mod company is crucial to saving your home and and how you can get a FREE evaluation to help determine why you were denied the first time.

Don't risk losing your home. Visit www.BestLoanModificationCompanies.org to get started.