The following circumstances can be identified as bad debts.
Creditor's rights that cannot be recovered after the borrower and guarantor are declared bankrupt, closed, dissolved or revoked according to law, and the legal person qualification is terminated;
According to the provisions of the General Principles of Civil Law of People's Republic of China (PRC), after the borrower dies or is declared missing or dead, the financial enterprise shall pay off his property or inheritance according to law, and recover the debt that cannot be recovered from the guarantor;
Creditor's rights that cannot be recovered after the borrower has suffered huge losses due to major natural disasters or accidents, and is unable to pay part or all of the debts after insurance compensation, and the financial enterprise has paid off its property and recovered from the guarantor;
Although the borrower and guarantor have not been declared bankrupt, closed down, dissolved or revoked according to law, they have completely stopped their business activities, their business licenses have been cancelled or revoked by the administrative department for industry and commerce at or above the county level according to law, and the financial enterprise has failed to recover its creditor's rights after claiming compensation from the borrower and guarantor;
Creditor's rights that the borrower and guarantor have not been declared bankrupt, closed, dissolved or revoked according to law, but have completely stopped their business activities or their whereabouts are unknown, have not been registered for industry and commerce, or have not participated in the annual inspection of industry and commerce for more than two years in a row, and the financial enterprise has failed to recover after the borrower and guarantor recover their debts;
The borrower is punished according to law for violating the criminal law, the property is not enough to repay the borrowed debt, and there are no other debtors, and the financial enterprise really cannot recover the creditor's rights after recovery;
Because the borrower and the guarantor can't repay the due debts, the financial enterprises resort to the law, and the borrower and the guarantor are enforced by the court, and both the borrower and the guarantor have no property to enforce. After the termination, termination or suspension of execution by the court, the financial enterprise is still unable to recover its creditor's rights;
After the court takes legal action against the borrower and the guarantor, it dismisses the prosecution or orders to exempt (or partially exempt) the debtor's liability due to the disqualification or disappearance of the borrower and the guarantor; Or the creditor's rights that the court will not accept or support because of the loss or loss of the limitation of action of the loan contract, guarantee contract and other rights, and the financial enterprise cannot recover after recovery;
Due to the above reasons of 1 to 8, the borrower can't repay the debt due, and the financial enterprise obtains the debt-paying assets according to law, and the debt-paying amount is less than the difference between the loan principal and interest, and the creditor's rights can't be recovered after recovery;
When an advance payment occurs when opening a letter of credit, handling an acceptance bill, opening a letter of guarantee, etc. If the applicant and guarantor of the letter of credit cannot repay the advance due to the above reasons 1 to 9, the advance that cannot be recovered by the financial enterprise after recovery;
Financial enterprises with investment rights in accordance with the provisions of national laws and regulations invest abroad, and the equity that financial enterprises cannot recover after liquidation and recovery due to the bankruptcy, closure, dissolution or revocation or termination of legal person status of the invested enterprises;
After the financial enterprise is approved to dispose of the creditor's rights or equity by market means such as package sale, public auction and transfer, the difference between the sale and transfer price and the book value can be recognized as bad debts;
Legal basis:
Measures for the administration of write-off of bad debts of financial enterprises
Article 1 These Measures are formulated in accordance with relevant laws and regulations and the financial system of financial enterprises in order to standardize the management of write-off of bad debts of financial enterprises, enhance the risk prevention and control ability of financial enterprises and promote the healthy development of financial enterprises.
Article 2 These Measures shall apply to financial enterprises established in People's Republic of China (PRC) according to law, including policy banks, China Development Bank, commercial banks, insurance companies, financial asset management companies, securities companies, trust companies, financial companies, financial leasing companies, rural financial institutions and other financial enterprises (collectively referred to as financial enterprises).
Small loan companies, financing guarantee companies and other enterprises engaged in financial business shall be implemented with reference to these measures.
Article 3 The term "bad debts" as mentioned in these Measures refers to the creditor's rights and equity assets that financial enterprises bear risks and losses and meet the conditions identified in these Measures. The term "write-off" as mentioned in these Measures refers to the accounting treatment method in which financial enterprises write off confirmed bad debts, write off accrued assets impairment reserves or directly adjust profits and losses, and write down assets off the balance sheet.