non-performing loans (NPL) are forms of credit held by banks whose enforceability is questioned mainly for reasons related to difficulties of the debtor.
Impaired loans are divided into different categories:
- bad debts,
- substandard loans,
- maturing exposures,
- restructured exposures.
Each of them is classified based on the amount of the credit, difficulty of enforceability and timing of the maturities.
Italian banks hold over €200 billion in impaired loans, which corresponds to 3 times the European average and which, lately, has forced the government to find a solution with the leaders of the European Union. Solution that has been identified in the mechanism GACS.
