What is problem loan or distressed loan?
When a borrower fail to repay one or several installments of any existing loan that kinds of loans is called as problem loan. If any borrower fails to repay any installment of any loan then the bank analyze the case and take the effective steps to make that loan as regular.
The indicators of problem loan
Following are the indicators for problem loan, if banker observes any one of the following symptom then they take the necessary steps against it.
1. Irregular loan payment by the borrower.
2. Try to hide the sources of income.
3. Make delay in payment of installment.
4. Decrease the share price of Borrower Company.
5. Make application to the bank in order to increase the installment time span.
6. Failure to submit the financial statement to bank.
7. Fall of company’s total sale drastically.
8. Abnormal change in the financial statement of borrower firm.
9. Company lost the market popularity or decreases the demand of borrower product or service.
10. Fail to repay the other loan taken from other sources.
11. Liquidity crisis to the borrower self.
12. Make payment due to the account payable by the borrower.
13. Death of chairman/ CEO/ director or any other chief admin officer.
14. If any old and experience employee or senior worker leave the borrower company.
15. Face any types big business loss by the borrower company.
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