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Loan Portfolio Terms

Below are the basic terms found in a loan portfolio.

  • Portfolio Outstanding: This is the principal amount of all outstanding loans (either due or not yet due) at the end of a particular reporting period. Projected, past or future interest income of the portfolio is not inclusive.

 

  • Outstanding Loans: This is the total number of all loans that are presently running and have not yet been fully paid back.

 

  • Number of loans in arrears: Comprises of the total current numbers of all loans that are past due and not yet paid. This covers all the loans that have one or more payments in arrears due to non-payment.

 

  • Value of payments in arrears: This amount to all payments that are in arrears which include the principal plus interest.

 

  • Loan loss provision: This is the part of the gross loan portfolio that has been provisioned for as a result of the loss incurred on the loan. The transaction on the accounting procedure is to provide adequate information about anticipated loan losses in a book value format.

 

  • Write-Off: This is an accounting position that removes only arrear balance of written-off loan from the total gross loan portfolio and also from the loan loss provisioning account of the MFB.

 

  • Number of written-off loans. These are the total numbers of loans that have been written-off over a particular period in time because they are termed noncollectable and as such recognized in the MFBs books of account.

 

  • Value of loans written-off. These are the total value of loans that have been written-off over a particular period in time because they are termed noncollectable and as such recognized in the MFBs books of account.

 

  • Portfolio at risk (PAR): This is the outstanding principal balance of all loans in arrears. These include all non-performing loans that are re-scheduled and are categorized into portfolio aging and also known as Non-performing Loan (NPL)

 

  • Loans at Risk (LAR).This is a simple indicator that counts the total number of loans instead of their amounts. Though, with little different from PAR they both focus on repayment of outstanding loans.

 

  • Number of loans disbursed: This is the total number of loans that has been disbursed over a period of time and is presently running in the MFB.

 

  • Value of loans disbursed: This comprises the value of all loans that is disbursed within a specific period which includes the value of all performing and non-performing loans of a particular MFB.

 

  • Number of loans outstanding. This is the current number of loans that are fully active and still running in the portfolio of the MFB.
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