Non-Performing Loans’ Evolution During 2008-2014

In Romania the main bank’s activity is lending operation. Indeed, between banks' placements in first place stand the credits. The way in which banks allot the funds they manage can influence a decisive economic development locally or nationwide. On the other hand, any bank will assume, to some extent, risks when granting credits and, certainly, all banks currently register losses in the credit portfolio, when some borrowers does not honor their obligations. But whatever the risks, the credit portfolio losses can be minimized if credit operations are organized and managed professionally. From this point of view, the most important feature of the bank's management is to control the quality of the credit portfolio. This is because the poor quality of loans is the main cause of the banking failure. The IMF Guide recommends that loans and other assets should be classified as non-performing when rates representing principal and interest payment are overdue 90 days or more. Non-performing loans will also include loans with debt service less than 90 days which are considered by national law as non-performing when there are clear indications of the non-reimbursing situation or bankruptcy.