Reducing the Impact on Bank Assets by Reducing Problem Loans in Commercial Banks

In the modern financial system, commercial banks play a pivotal role in economic development by ensuring the efficient allocation of financial resources through lending and investment. However, the sustainability of banks' financial intermediation function heavily depends on the quality of their loan portfolios. Among the most pressing challenges facing commercial banks globally is the management and reduction of problem loans, also known as non-performing loans (NPLs). These are loans for which the borrower has failed to meet scheduled payments for a specified period, typically 90 days or more, and they pose a significant threat to the financial stability of banking institutions.