Non-Performing Loan
Also called: NPL, bad loan, impaired loan
A non-performing loan is one where payments are 90 days or more overdue, or repayment in full is otherwise unlikely. The NPL ratio is the standard asset-quality measure for a banking system, and it moves late in a downturn — a lagging indicator that becomes a leading indicator of restricted lending, since capital tied up in bad loans cannot support new ones.