NPL’s - A Brief Introduction to Loans That Have Gone Walkabout

Let’s set the scene: you lend your mate Steve twenty quid. He promises to pay you back “by Friday.” Several Fridays later, Steve is now strangely unavailable, and you’re starting to suspect that twenty quid is gone for good. Congratulations – you’ve just experienced a non-performing loan.

In banking terms, a non-performing loan (NPL) is a loan where the borrower’s gone AWOL on their repayments. The industry benchmark is 90 days past the due date, but different countries and asset classes have their own rules. You’ll also hear them called defaulted loans, distressed credit, or, in particularly honest circles, financial regrets.