A non-performing loan (NPL) is a loan on which the borrower is in default and has not made any scheduled payments of principal or interest for a specified period of time.
In banking, commercial loans are considered non-performing if the borrower is overdue by 90 days.
The International Monetary Fund considers loans less than 90 days overdue to be non-performing if there is high uncertainty about future payments.
However, there is no standard or definition for NPLs.
Some banks choose to sell non-performing loans to other banks or investors to free up capital and/or focus on providing income-generating loans.