A non-performing loan (NPL) is a loan that is in default or close to being in default.

Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full (IMF) Non-performing loan -- a loan that is not earning income and: (1) full payment of principal and interest is no longer anticipated, (2) principal or interest is 90 days or more delinquent, or (3) the maturity date has passed and payment in full has not been made. If your loan is just under/about to reach NPL, the bank normally shall issue letters of demand and if you still do not pay after 3 or 5 months, the bank shall summon you to court for 1st mention - normally to ask you whether you admit to the debt claimed by the bank. If you admit, a consent judgement is entered whereby you then renegotiate with your bank to settle the debt (loan/credit cards). If you still do not pay, among other actions, the bank shall apply to seize your assets/properties or WSS (writ of seizure & sales) or even blacklist you. Remember one thing, those bank's debt collectors/agencies have no right to threaten and beat you up. If they do threaten, do NOT hesitate to report them to the police/media/MCA Complaint Bureau and even complain to the Bank Negara. Banks will be afraid to have their ethics and professional public reputation tarnished! Your passport normally is impounded when you are issued a bankruptcy order where all your bank accounts, assets and properties will be frozen. You cannot open a bank account without permission from the Insolvency Dept. You can work as an employee but cannot transact or do business. You also would not be able to renew your own motor vehicle road tax. The good news is that our EPF, Pension, SOSCO and Insurance money are protected meaning our creditors cannot seize them. On the other hand, a person blacklisted can have everything except finding it impossible to get loan or finance or credit card. A blacklist can still open bank accounts but be careful not to open accounts in your creditor bank(s) where you are in debt otherwise they shall seize your money there.

A sum of borrowed money upon which the debtor has not made his or her scheduled payments for at least 90 days. A nonperforming loan is either in default or close to being in default. Once a loan is nonperforming, the odds that it will be repaid in full are considered to be substantially lower. If the debtor starts making payments again on a nonperforming loan, it becomes a reperforming loan, even if the debtor has not caught up on all the missed payments.

Investopedia explains 'Nonperforming Loan - NPL'

Institutions holding nonperforming loans in their portfolios may choose to sell them to other investors in order to get rid of risky assets and clean up their balance sheets. Sales of nonperforming loans must be carefully considered since they can have numerous financial implications, including affecting the company's profit and loss, and tax situations.

Read more: http://www.investopedia.com/terms/n/nonperformingloan.asp#ixzz1sQ04W3dQ By Bank regulatory definition[citation needed] non-performing loans consist of:

other real estate owned which is that taken by foreclosure or a deed in lieu of foreclosure, loans that are 90 days or more past due and still accruing interest, and loans which have been placed on nonaccrual (i.e., loans for which interest is no longer accrued and posted to the income statement).