Introduction
Delinquency and non-performing loans (NPLs) are among the most significant challenges affecting the financial performance, liquidity, profitability, and sustainability of lending institutions. SACCOs, MFIs, banks, fintechs, and other financial institutions require effective systems for identifying emerging repayment problems, monitoring arrears, managing distressed accounts, and preventing temporary payment difficulties from developing into serious credit losses.
Effective delinquency management begins with early identification and intervention. Institutions need reliable processes for monitoring repayment behavior, analyzing arrears, segmenting delinquent accounts, identifying the causes of deterioration, and applying appropriate corrective measures. Once loans become non-performing, structured approaches to rehabilitation, restructuring, recovery, provisioning, and write-offs become essential.
This course provides participants with practical knowledge and skills for managing delinquency and NPLs throughout their lifecycle. It examines delinquency measurement, portfolio aging, early warning indicators, NPL classification, borrower assessment, collections, restructuring, recovery, provisioning, write-offs, and post-write-off recovery.
The programme also emphasizes portfolio analytics and management reporting to support timely decision-making. Participants will learn how to analyze delinquency trends, identify high-risk portfolio segments, assess recovery prospects, develop NPL reduction strategies, and strengthen institutional systems for maintaining healthy loan portfolios.
Course Objectives
By the end of this course, participants will be able to:
- Understand the causes, stages, and implications of loan delinquency and non-performing loans.
- Establish effective systems for identifying, measuring, monitoring, and reporting delinquency.
- Apply portfolio aging and delinquency analysis techniques.
- Calculate and interpret key delinquency and NPL indicators.
- Identify early warning indicators of borrower and portfolio deterioration.
- Segment delinquent and non-performing accounts according to risk and recovery prospects.
- Analyze the root causes of delinquency and loan deterioration.
- Develop appropriate strategies for preventing and managing delinquency.
- Apply effective approaches to NPL management, rehabilitation, restructuring, and recovery.
- Assess borrower willingness and capacity to repay distressed loans.
- Develop appropriate collections and recovery strategies for different categories of problem loans.
- Understand loan classification, provisioning, impairment, and write-off concepts.
- Use portfolio data and analytics to monitor NPL trends and recovery performance.
- Evaluate the impact of NPLs on profitability, liquidity, capital, and institutional sustainability.
- Strengthen governance, internal controls, and accountability for NPL management.
- Develop practical strategies for reducing delinquency and improving portfolio quality.
Duration
5 Days
Target Audience
This course is designed for:
- Credit Managers and Credit Officers
- Loan Officers and Lending Officers
- Portfolio Managers
- Collections and Recovery Officers
- Risk Managers and Risk Officers
- Credit Analysts
- SACCO Credit and Recovery Professionals
- Microfinance Credit Professionals
- Banking and Financial Services Professionals
- Branch Managers and Supervisors
- Relationship Managers
- Credit Committee Members
- Finance and Accounting Professionals
- Internal and External Auditors
- Compliance Officers
- Portfolio Monitoring and Reporting Teams
- Legal and Recovery Professionals
- Senior Managers responsible for credit and portfolio quality
Module 1: Understanding Loan Delinquency and Non-Performing Loans
Foundations of Delinquency Management
- Meaning and importance of loan delinquency management
- Delinquency versus default and non-performing loans
- Stages of loan delinquency
- Causes and drivers of repayment problems
- Relationship between credit appraisal and delinquency
- The cost of poor delinquency management
Types and Causes of Delinquency
- Borrower-specific causes
- Business and operational challenges
- Income disruption
- Over-indebtedness
- Economic and market factors
- Poor credit monitoring
- Strategic default
- Fraud and misrepresentation
Understanding Non-Performing Loans
- Definition and characteristics of NPLs
- NPL identification and classification
- NPL measurement
- NPL trends and portfolio deterioration
- NPLs and credit risk
- Financial and operational implications of NPLs
Impact of Delinquency and NPLs
- Impact on interest income
- Impact on profitability
- Liquidity implications
- Capital and solvency implications
- Provisioning and credit losses
- Operational and reputational implications
Practical Exercise
Participants will analyze a sample loan portfolio, identify delinquent and non-performing accounts, classify accounts by delinquency stage, and assess the potential financial implications.
Module 2: Delinquency Monitoring, Measurement and Early Intervention
Delinquency Measurement
- Portfolio aging
- Days past due
- Delinquency ratios
- PAR 30, PAR 60 and PAR 90
- NPL ratios
- Roll rates
- Cure rates
- Migration analysis
- Write-off ratios
Portfolio Aging and Trend Analysis
- Aging schedules
- Movement between delinquency categories
- Identifying deteriorating segments
- Branch and product-level analysis
- Borrower and sector-level analysis
- Vintage and cohort analysis
Early Warning Indicators
- Missed and delayed payments
- Declining account activity
- Increasing borrower indebtedness
- Deteriorating financial performance
- Changes in business conditions
- Declining cash flows
- Changes in borrower behavior
- External economic and industry indicators
Early Intervention Strategies
- Preventive contact
- Payment reminders
- Borrower engagement
- Account reviews
- Short-term repayment arrangements
- Escalation procedures
- Monitoring high-risk accounts
Practical Exercise
Participants will calculate key delinquency indicators from a sample portfolio, analyze portfolio aging and migration, and identify accounts requiring early intervention.
Module 3: Non-Performing Loans Assessment, Restructuring and Rehabilitation
Assessing Distressed Borrowers
- Reviewing borrower financial position
- Assessing repayment capacity
- Cash-flow analysis
- Understanding the causes of distress
- Willingness versus ability to repay
- Assessing business viability
- Recovery prospects
NPL Segmentation
- Segmenting NPLs by age
- Exposure and outstanding balance
- Borrower risk
- Collateral position
- Recovery probability
- Sector and geographic risk
- Strategic versus genuine distress
Loan Restructuring and Rehabilitation
- Principles of loan restructuring
- Rescheduling and revised repayment plans
- Temporary concessions
- Grace periods
- Interest and repayment adjustments
- Rehabilitation of viable borrowers
- Monitoring restructured accounts
- Preventing repeated restructuring
Managing High-Risk and Chronic Delinquency
- Chronic delinquent accounts
- Large and high-value exposures
- Multiple borrowing and over-indebtedness
- Difficult-to-contact borrowers
- Guarantor and group-related exposures
- Escalation of recovery actions
Practical Exercise
Participants will assess a distressed borrower, determine whether rehabilitation or restructuring is appropriate, and develop a sustainable repayment and monitoring plan.
Module 4: NPL Collections, Recovery, Provisioning and Write-Offs
NPL Collections and Recovery
- Developing NPL recovery strategies
- Collections prioritization
- Borrower engagement and negotiation
- Promise-to-pay arrangements
- Recovery segmentation
- Field and digital collections
- Recovery performance measurement
Collateral and Guarantee Recovery
- Collateral assessment
- Collateral monitoring
- Guarantor engagement
- Voluntary recovery
- Collateral realization
- Recovery costs and proceeds
- Managing legal and operational risks
Provisioning and Credit Loss Management
- Purpose of loan loss provisioning
- Loan classification and provisioning principles
- Expected credit loss concepts
- Relationship between delinquency and provisioning
- Credit loss recognition
- Provision coverage and adequacy
- Impact of provisions on financial performance
Loan Write-Offs
- Purpose and principles of write-offs
- Write-off criteria and approval
- Accounting and portfolio implications
- Maintaining recovery rights
- Post-write-off collections
- Measuring recovery from written-off accounts
Practical Exercise
Participants will develop an NPL recovery strategy for a sample portfolio and assess appropriate restructuring, recovery, provisioning, and write-off actions.
Module 5: NPL Analytics, Governance and Portfolio Quality Improvement
NPL Analytics and Reporting
- NPL trend analysis
- Delinquency dashboards
- Portfolio quality reporting
- Recovery forecasting
- Branch and product performance
- Borrower segmentation
- Risk concentration analysis
- Management information for NPL decisions
Technology and Data-Driven NPL Management
- Loan management systems
- Automated arrears monitoring
- Digital collections
- Collection workflow systems
- Portfolio dashboards
- Data analytics and predictive risk indicators
- Using AI and machine learning for delinquency monitoring
NPL Governance and Internal Controls
- Board and management oversight
- Credit and recovery committees
- NPL management policies
- Roles and responsibilities
- Segregation of duties
- Documentation and audit trails
- Internal audit and independent assurance
- Compliance and regulatory reporting
Developing an NPL Reduction Strategy
- Diagnosing the causes of portfolio deterioration
- Setting delinquency and NPL targets
- Preventive and corrective measures
- Strengthening credit monitoring
- Improving collections and recovery
- Portfolio rehabilitation and clean-up
- Reducing repeat delinquency
- Continuous portfolio quality improvement
Practical Exercise
Participants will develop a comprehensive NPL Reduction and Portfolio Quality Improvement Plan based on a simulated institutional portfolio, including targets, interventions, responsible teams, performance indicators, and monitoring arrangements.
Training Approach
The training will adopt a highly practical, analytical, and interactive approach focused on helping participants address real-world delinquency and NPL challenges. The programme will combine expert presentations, facilitated discussions, case studies, portfolio analysis, practical calculations, borrower assessment exercises, restructuring simulations, recovery scenarios, group assignments, and problem-solving activities. Participants will work with realistic portfolio data to calculate delinquency and NPL indicators, analyze aging and migration trends, identify early warning signals, assess distressed borrowers, develop recovery strategies, and formulate NPL reduction plans. Where appropriate, participants may bring anonymized institutional portfolio data, NPL reports, credit policies, and existing monitoring tools for practical application.
General Notes
Training Requirements: Participants should have basic knowledge of lending, credit management, finance, or financial services operations.
Training Materials: Participants will receive comprehensive course materials, practical exercises, case studies, templates, and relevant reference resources.
Certification: Participants who successfully complete the programme will receive a Kincaid Development Center Certificate of Completion.
Training Venue: The programme can be delivered at Kincaid Development Center, the client’s premises, another agreed venue, or online.
Course Customization: The programme can be customized to the country operating environment and institutional context, including SACCOs, MFIs, banks, fintechs, and other financial institutions. Content can be adapted to organization-specific NPL policies, portfolio characteristics, loan classification and provisioning frameworks, recovery systems, reporting requirements, regulatory expectations, strategic priorities, and specific portfolio quality challenges.