Substandard
The Substandard loans are - loans, which have well defined credit weaknesses, where the current sound worth and paying capacity of the borrower is not assured and that timely repayment of the obligations is in jeopardy. They are characterized by the distinct possibility that the bank will sustain some loss unless the deficiencies are corrected
Loans possessing any of the following characteristics shall be classified as Substandard.
a) Inadequate cash flows and / or defects in loan documentation.
b) Inadequate and / or unhealthy operations in the account.
c) Imminent probability of foreclosure or acquisition of collateral.
d) Failure to clear temporary or short-term facilities.
e) Frequent rollovers and / or renewals without definite source/s of repayment.
f) Adjusting delinquency by creating fresh facilities and / or allowing excess drawings in other related concerns’ or individual accounts.
g) Significant negative trends in financial statements – deterioration in account receivables, declines in net worth and profitability, build-up of inventories, liquidity problem, etc.
h) Loans under dispute and recovery measures are being contemplated.
i) Remain past due for 90 days or more but less than 270 days.