What is Non-performing loan?

A loan on which the borrower has stopped payments for a long time or whose full repayment is in serious doubt. In World Bank statistics, the indicator covers loans on which payments of principal and interest are 90 days or more past due, or whose full repayment without selling the collateral is unlikely; the exact criterion is set by each country's banking supervision rules. The share of non-performing loans in total loans is an important indicator of the health of the banking system: if it rises, the bank creates more allowances and its profit falls.

Source: World Bank, World Development Indicators: Bank nonperforming loans to total gross loans (%)