According to Article 2 of the Directive on the Classification of Bank Assets and Credit Institutions, approved on 2006/12/30 by the Money and Credit Council, loans granted are classified into four categories based on their quality: current, overdue, non-performing, and doubtful. The quality of each loan is assessed based on three parameters: time, the financial status of the customer, and the industry or field of activity involved, with the time factor (delay in loan repayment) being the primary basis for classification.
Therefore, if there is a dispute between the borrower, guarantors, and the bank regarding the calculation method and the amount of outstanding debt, the loan will be reclassified from the current category based on the time parameter, according to the mentioned directive. This reclassification will impact the credit scoring of the customer for future loan applications. However, there is a possibility that a court ruling may be issued against the bank, and after the enforcement of the ruling, the said loan may be considered settled.
Proposal:
Given the aforementioned points, it appears necessary to make amendments to the laws and regulations governing the credit assessment of bank customers to prevent the infringement of the rights of both banks and loan recipients. The suggested amendment is that in cases of disputes between the borrower, guarantors, and the bank regarding the outstanding balance of previous loans that are being adjudicated in legal courts, the main criterion for credit assessment of the loan applicant should be the value of free and easily sellable collateral rather than the previously mentioned loan categories.
Click here to download the Directive on the Classification of Bank Assets and Credit Institutions.
