In banking, BLW stands for Bad/Loss-Write Off, a classification assigned to non-performing loans. These are loans where the principal and/or interest payments are overdue and considered unrecoverable.
Here's a breakdown:
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Non-Performing Loans (NPLs): These are loans where the borrower has failed to make scheduled payments for a specified period.
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Classification of NPLs: Banks categorize NPLs based on the degree of risk associated with their recovery. The common classifications are:
- Substandard (SS)
- Doubtful (DF)
- Bad/Loss (BL)
- Bad/Loss-Write Off (BLW)
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Bad/Loss-Write Off (BLW): This is the final stage of NPL classification. Loans in this category are considered uncollectible and are written off the bank's balance sheet. Writing off a loan doesn't necessarily mean the bank stops pursuing recovery; it simply acknowledges the unlikelihood of repayment. The bank might still attempt to recover the debt through legal means or by selling it to a collection agency.
In essence, BLW signifies that the bank recognizes the loan as a loss and removes it from its assets, though recovery efforts might continue.
