In this guide 6 sections
Overdue means a payment is late. A moratorium pauses payments by agreement. Restructuring rewrites the repayment terms. Non performing status is a formal label a lender applies after prolonged default. Each state needs its own dates and flags on the loan account. Local rules set the exact thresholds.
Overdue and the bucket report
A loan is overdue when an instalment is due and unpaid. Lenders group accounts into buckets by how late they are, such as current, early overdue and seriously overdue.
Staff read this view every morning. Collections calls, field visits and legal notices each begin at a different bucket. A bucket is calculated, never typed in.
The software should store the due date, the amount due and every receipt. Three fields are enough. From those three it can work out days past due on any date, including a date last quarter.
- Instalment due date and amount
- Receipts with value date
- Days past due, recalculated daily
- Bucket label for the report
- Last contact and promise to pay date
Moratorium means a pause with a date
A moratorium is an agreed gap in repayment. The borrower pays nothing, or only interest, for a set period, often after a flood, a lockdown or a delayed project.
Two things trip up systems. Interest may still accrue during the pause. The closing balance then rises although no instalment fell due. The end of the pause also pushes every later instalment forward by the length of the gap. If the account never learned the pause existed, the overdue count will be wrong.
Record the start, the end, the reason and the approver. Keep the original schedule beside the new one. An auditor will ask for both.
Restructuring rewrites the schedule
Restructuring changes the terms of a loan the borrower cannot meet as written. The tenor may stretch, the rate may drop, or part of the arrears may move into a new instalment.
It is a new agreement with its own paperwork. The old schedule stops, a new one begins, and the account usually carries a flag showing it was restructured. Some regimes require extra provisioning for flagged accounts.
Ask your compliance officer which rules apply to you. Software cannot decide that for you. It can hold the flag, the approval and the date a restructured account may be treated as regular again.
- Reason code and approval record
- Old and new schedule side by side
- Restructure flag with start date
- Review date for upgrade
- Collateral and guarantor changes
NPA is a status, not a bucket
NPA stands for non performing asset. A lender classes a loan this way when payments stay overdue beyond a regulatory period, which differs by country and by lender type.
Once an account is non performing, interest income may stop being booked, provisions rise and recovery moves to a different team. The change reaches the books, so the label needs a date and an approver.
Systems often show overdue days and the NPA flag in one column. Keep them apart. Give the NPA flag its own date, its own approver and its own audit trail, so a reviewer can see who changed the status and why. A loan can be badly overdue and still await review, or recover and need a controlled upgrade.
Putting these terms in the account record
New staff learn faster when every term is a visible field. Print one sample account and mark where each state shows up, from the due date column to the approval note. Walk the new joiner through it once, using a real borrower’s anonymised history, so the terms stick. Add the sanction date, the disbursal date and the first instalment date.
Then test the edge cases. A borrower who pays during a moratorium, a restructured loan that goes overdue again and an NPA account that clears its arrears all need clear rules.
Ask your lending software vendor to run these three cases live. Write each outcome on the same sample sheet and share it with the collections team.
Loan status field map
Rows of a single grid cover each state: current, overdue, moratorium, restructured and non performing. Columns list the fields that define it, who may set it, the report it feeds and the next review date. Below the grid sit three edge case boxes to fill in: payment during moratorium, repeat default and upgrade after clearing arrears.
Open a blank worksheet to printQuestions owners ask
Is a restructured loan the same as an NPA?
No. A restructured loan has new terms agreed with the borrower and may still be performing. It can later become non performing if payments fail again.
Does a moratorium stop interest?
Not always. Many moratoria let interest accrue, so the balance grows even while no instalment is due. Check the signed terms for each loan. The sanction letter and the moratorium addendum usually say, and the system should hold a copy beside the account.
Who decides when a loan becomes an NPA?
The classification follows rules set by the regulator and the lender’s own policy. Software applies the dates, and a named officer confirms the status.
Can software handle these rules for every country?
It can be set up for one regime at a time. Rules differ, so confirm the thresholds with your compliance adviser before configuring them.