What is meant by "Non-Performing Loans", "Non-Accrual Loans" "Loans Subject
According to the "Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performingNon-accrual Loans and Bad Debt" [in force since July 1, 2005], "non-performing loans" refers to those loans for which the principal or interest has been in arrears for three  months or more, and loans for which the principal or interest has not yet been in arrears for more than three  months, but with regard to which the bank has sought payment from primarysubordinate debtors or has disposed of collateral. If a restructured loan meets certain conditions, and the negotiated terms have been performed for over six  months, and the negotiated interest rate is not lower than the rate of the original loan or the rates of new loans in the same risk category, the loan may be exempted from reporting as a non-performing loan. However, if the negotiated installment payments are in arrears for three  months or more during the period of exemption, the loan shall still be reported as such. "Non-accrual Loan" as used in the Regulations refers to loans and other extensions of credit transferred to the non-accrual loans account. All non-performing loans shall be transferred to the non-accrual loans account within six  months after the end of the payment period. However, restructured loans performing in accordance with the agreement shall not be subject to this requirement. "Loans Subject to Observation" includes the above mentioned non-performing loans and the loans which the principal or interest has been in arrears less than 3 months. Moreover, such restructured loans may be exempted from reporting as non-performing loans, but should be reported as loans subject to observation rather than as regular loans.