Non-performing loan
Loan that is unlikely to be repaid / From Wikipedia, the free encyclopedia
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A non-performing loan (NPL) is a bank loan that is subject to late repayment or is unlikely to be repaid by the borrower in full. Non-performing loans represent a major challenge for the banking sector, as they reduce profitability.[1] They are often claimed to prevent banks from lending more to businesses and consumers, which in turn slows economic growth, although this theory is disputed.[2][3]
In the European Union, the management of the NPLs resulting from the global financial crisis of 2008 has become a politically sensitive topic, culminating in 2017 with the decision by the European Council[4] to task the European Commission to launch an action plan to tackle NPLs. The action plan supports the fostering of a secondary market for NPLs and the creation of Asset Management Companies (aka bad banks). In December 2020, this action plan was revised in the wake of the COVID-19 pandemic crisis.[5]