In order to strengthen credit risk management and further adjust and improve the existing credit risk classification and monitoring methods, according to the requirements of the Notice on Promoting and Perfecting Loan Risk Classification (No.22 [2003]) and Opinions on Fully Implementing the Five-level Loan Classification System of China Agricultural Development Bank (No.24 [2003]) issued by CBRC, According to the Notice of the People's Bank of China on the Full Implementation of Five-level Classified Management of Loan Quality (Yinfa [2001] No.416) and the basic loan system and various loan management measures of China Agricultural Development Bank (hereinafter referred to as the Agricultural Development Bank), these measures are formulated.
Loan risk classification refers to the process and result of classifying loans into different grades according to the degree of risk. Through classification, the following purposes should be achieved: (1) Reveal the degree of loan risk and truly, comprehensively and dynamically reflect the loan quality; (two) timely reflect the problems existing in loan issuance, management, monitoring, collection and non-performing loan management, and strengthen credit management; (three) to provide a basis for the full withdrawal and rational use of the loan bad debt reserve.
First, the main advantages of the five-level classification of loans
1. Five-level classification can reflect the quality of credit assets more accurately, timely and truly. In the past, the term management was based on whether the loan was overdue and the length of overdue time as the standard to judge the loan quality, so the classification results were lagging behind in identifying the quality of credit assets and reflected untrue. For example, some unexpired loans, especially medium-and long-term loans, have lost the borrower's repayment ability and are classified as normal loans according to the standard of term management, thus covering up the real situation of loans. The five-level classification avoids this situation. It takes the borrower's repayment ability as the core, and fully considers various factors affecting repayment ability, such as corporate cash flow, credit support and financial factors. Therefore, the risk reflection is more objective and true, which is also the fundamental difference between it and the term management method.
2. The five-level classification has a complete risk early warning mechanism. At this stage, China is moving towards a mature market economy, and the risk coefficient of loans is getting bigger and bigger, especially at present, the operating efficiency of enterprises is not good, and debt evasion occurs from time to time. The traditional term management method can only find problems afterwards, and the market forecast is not satisfactory. Five-level classification is a kind of dynamic risk management. Real-time monitoring and management of whether loans are overdue and qualitative determination in advance are beneficial for credit managers to find problems and predict risks in time, seize various potential risks and possible signs, send out early warning signals and take effective measures to control risks.
3. The five-level loan classification has a wider scope of application. The five-level classification of loans includes not only on-balance sheet items, but also off-balance sheet items, such as letters of credit, guarantees and loan commitments. However, the term management method only classifies the single loan items in the table and cannot reflect the whole picture of the bank's financial assets.
4. The five-level classification of loans is more scientific. The term management method is too strict with the standard of overdue loans. A loans overdue is considered as a non-performing loan in one day, regardless of the borrower's repayment ability. The core of the five-level classification is the possibility and reliability of loan repayment, which mainly examines the repayment ability of borrowers. Therefore, according to international practice and five-level classification standards, there is generally a 90-day grace period. According to the traditional term management method, loans overdue is classified as sluggish only after the operation stops and the project is dismounted. According to the five-level classification, this kind of loan will lose at least part.
5. Five-level classified accounting is more standardized. According to the five-level classification, the arrears of interest on overdue loans will stop being included in income within 90 days. The term management law stipulates that loans overdue can be suspended for two years, which leads to overestimation of bank income, inflated profits and overpayment of taxes.
6. Five-level classification can more truly reflect the present value of loans and provide a reliable basis for commercial banks to make provision for bad debts. According to the gradual process of loan loss, the five-level classification predicts the loan loss probability according to different periods, and reserves are drawn according to the loss probability. However, the rule of term management is to accrue according to a single proportion, and the change of bad debt provision is not directly related to the increase or decrease of non-performing loans.
Two, the implementation of the five-level classification of loans constraints
1. The quality of credit managers needs to be improved. The five-level classification management method requires operators or inspectors engaged in loan classification to make a lot of high-level analysis and judgment in the process of loan classification, requires credit managers to make continuous analysis and judgment in daily monitoring, and also requires inspectors to have rich knowledge and judgment ability. This puts higher demands on the current bank credit personnel, internal auditors and supervisors.
2. There is no specific standard for the classification of various loans. Although the Guiding Principles of Loan Risk Classification stipulates the objectives, standards, basic requirements, organization, implementation, supervision and management of loan classification, it has no specific requirements for all kinds of loan management, which is not conducive to the actual operation of grassroots credit personnel. In order to strengthen loan management, banks should formulate unified and classified operating procedures for loan management, inspection, assessment and collection, and put forward clear requirements.
Third, the significance of the five-level classification of bank loans
According to the number of days, less than 30, 30-60, 60-90, 90- 180, 180.
Four, the five categories of bank loans
First, the main advantages of the five-level classification of loans
1. Five-level classification can reflect the quality of credit assets more accurately, timely and truly. The previous term and the length of overdue time are used as the criteria to judge the quality of loans, so the results of this classification lag behind in identifying the quality of credit assets and reflect inaccurately. For example, some unexpired loans, especially medium-and long-term loans, have lost the borrower's repayment ability and are classified as normal loans according to the standard of term management, thus covering up the real situation of loans. Taking the five-level classification of borrowers' repayment ability as the core, it fully considers various factors that affect the repayment ability, such as cash flow, credit support and financial factors, so the risk reflection is more objective and true, which is also its difference.
2. The five-level classification has a complete risk early warning mechanism. At this stage, the risk coefficient of economic aid and loans is increasing, especially from time to time. The traditional term management method can only find problems afterwards, and the market forecast is not satisfactory. Five-level classification is a kind of dynamic risk management, which monitors the quality in real time whether the loan is overdue or not, which is helpful for credit managers to find problems and predict risks in time, seize all kinds of potential risks and possible signs, and take effective measures to control the occurrence of risks.
3. The five-level loan classification has a wider scope of application. The five-level loan classification does not include off-balance sheet items, such as letters of credit, guarantees and loan commitments. However, the classification of individual loan items in the term table does not reflect the whole picture of bank financial assets.
4. The five-level classification of loans is more scientific. The term management law is too strict with the standard of overdue loans, and one day overdue is regarded as non-performing loans. The core of the five-level classification is the possibility and reliability of loan repayment, which mainly examines the repayment ability of borrowers. Therefore, according to international practice and five-level classification standards, there is generally a 90-day grace period. According to the traditional deadline management method, a project is classified as sluggish if it is overdue for more than two years or has not stopped. According to the five-level classification method, this loan is a loss.
According to the five-level classification, the overdue interest on overdue loans will stop being included in the income within 90 days. The term management law stipulates that loans overdue can be suspended for two years, which leads to overestimation of bank income, inflated profits and overpayment of taxes.
6. Five-level classification can more truly reflect the present value of loans and provide a reliable basis for commercial banks to make provision for bad debts. Five-level classification is based on the loan loss probability in the gradual process of loan loss, and the reserve is accrued according to the loss probability. However, the rule of term management is to accrue according to a single proportion, and the change of bad debt provision is not directly related to the increase or decrease of non-performing loans.
Two, the implementation of the five-level classification of loans constraints
1. The quality of credit managers needs to be improved. The five-level classification management method requires operators engaged in loan classification or a large number of high-level analysis and judgment, requires credit managers to constantly analyze and judge in daily monitoring, and also requires inspectors to have rich knowledge and judgment ability. This puts higher demands on the current bank credit personnel, internal auditors and supervisors.
2. There is no specific standard for the classification of various loans. Although the Guiding Principles of Loan Risk Classification stipulates the objectives, standards, basic requirements, organization, implementation, supervision and management of loan classification, it has no specific requirements for all kinds of loan management, which is not conducive to the actual operation of grassroots credit personnel. In order to strengthen loan management, banks should formulate unified and classified operating procedures for loan management, inspection, assessment and collection, and put forward clear requirements.