Nonperforming Asset Law and Legal Definition

An asset not producing income is a non performing asset. A loan not paying principal and interest according to the original terms of the borrower’s loan agreement is a nonperforming loan. All commercial loans overdue for more than ninety days and all consumer loans overdue for more than one eighty days are classified as banks' nonperforming assets. Loans of this type are considered nonperforming because the borrower is no longer paying on the principal or the interest to the loan. Usually, banks declare loans in default as non performing assets.