Business loans to grasp what financial indicators

Must be greater than 100% (real estate companies can be greater than 80%). 2, gearing ratio. Must be less than 70%, preferably less than 55%. Solvency: 3, current ratio. In general, the larger the indicator, indicating that the enterprise's short-term solvency is stronger, usually the indicator in 150% to 200% better. 4, quick ratio. In general, the greater the indicator, indicating that the enterprise's short-term solvency is stronger, usually the indicator is better at about 100%, the appropriate relaxation of small and medium-sized enterprises, should also be greater than 80%. 5, guarantee ratio. Enterprises should minimize the risk of loss. Generally speaking, the ratio is less than 0.5 is good. Cash flow: 6, the net cash flow generated by the enterprise's operating activities should be positive, and its sales revenue cash back should be more than 85~95%. 7, the enterprise in the operating activities to pay for the purchase of goods, labor cash payment rate should be more than 85 ~ 95%. Operating capacity: 8, the growth rate of main business income. Generally speaking, if the annual growth rate of main business income is not less than 8%, it means that the main business of the enterprise is in the growth period. If the rate is less than -5%, it means that the product will enter the end of life. 9, accounts receivable turnover rate. General business should be greater than six times. Generally speaking, the higher the turnover rate of accounts receivable, the shorter the average collection period of accounts receivable, the faster the speed of capital recovery. 10, inventory turnover speed, general small and medium-sized enterprises should be greater than five times. The faster the inventory turnover speed, the lower the inventory occupancy level, the stronger the liquidity. Operating efficiency: 11, operating profit margin, the indicator indicates the profitability of the annual operating income, reflecting the comprehensive profitability of the enterprise. Generally speaking, the indicator should be greater than 8%, of course, the greater the value of the indicator, indicating that the enterprise's comprehensive profitability is stronger. 12, return on net assets, currently for small and medium-sized enterprises should be greater than 5%. Generally speaking, the higher the value of this indicator, the higher the return on investment, and the higher the level of shareholders' income. Loan classification deviation check counseling information A. Meaning of loan classification deviation Loan classification deviation refers to the extent to which the results of the form classification differ from the actual form when commercial banks classify mortgages at five levels. Including the degree of deviation of the overall classification of non-performing loans and the degree of deviation of all types of forms in the five-level classification. Its calculation formula: relative deviation = (proportion of non-performing loans confirmed by inspection / proportion of non-performing loans recognized by the inspected institution itself - 1) × 100%; absolute deviation = proportion of non-performing loans recognized by inspection - proportion of non-performing loans recognized by the inspected institution itself. This inspection is calculated using the absolute deviation formula. Second, why there is a degree of deviation The five-level classification of loans is a process of subjective thinking of the human brain, which will inevitably lead to differences in the classification results due to the differences in the identification and judgment abilities of different people. From the current factors affecting the authenticity and accuracy of the five-level classification of loans in commercial banks to analyze, the main reasons for the classification deviation are as follows: 1. Human factors. First, the classification operator's understanding of the system, the uneven level of business, resulting in inaccurate classification results; Second, the degree of mastery of the various information provided by the enterprise and the analysis and judgment is not allowed to form the deviation; Third, in order to complete the "catching drop" assessment indicators, in the loan period and the loan guarantee to make the technical processing, such as borrowing new to pay off the old, guarantee, change pledge, etc., artificially adjusted. Thirdly, in order to fulfill the assessment index of "catching down", technical treatments are made on loan term and loan guarantee, such as borrowing new loans to repay old ones, guaranteeing, changing pledge, etc., which artificially adjusts the classification results; fourthly, the classification system is not strictly enforced, which results in the deviation of classification, which is mainly manifested in simplifying the classification procedures and standards, untimely and non-continuous classification, and classification and determination without the prescribed authority. 2. Policy factors. First, the impact of the national macro-control policies, changes in certain industry policies, thereby affecting the changes in credit policy, resulting in significant impact on the loan input, investment, resulting in classification deviation; Second, the parent bank of the non-performing loans of the grassroots banks to implement quota control, the non-performing loans are planned to "release". 3. Information asymmetry. First, it is difficult for banks to obtain customers' real * financial information, especially small and medium-sized enterprises and individual entrepreneurs, due to the financial management is not standardized, the degree of financial information can be * low, thus affecting the deviation of the loan classification; Second, in order to obtain the bank's loan, individual enterprises to the bank to provide false financial data and business management information, resulting in the classification of the results of the inaccuracies and deviations. 4. Inconsistent classification standards. The Guiding Principles for Five-Level Classification formulated by the People's Bank of China in 2001 is the current normative document for the work of five-level classification, but this document has only a core definition of the classification standards without specific operational explanations, and the standards determined are vague and flexible. Each bank has formulated its own "Loan Classification Implementation Measures" based on this document and the actual situation of the bank. Due to the different degree of understanding and mastery of each bank, the classification standards are different, and the Guiding Principles for Five-Level Classification is used as the inspection standard in practice, which leads to a certain degree of disagreement between the inspectors and the commercial banks on the classification standards, and thus leads to deviation of the classification results. 5. Moral hazard and adverse selection. Firstly, in order to escape responsibility and cover up the truth, managers or classifiers reflected non-performing loans in normal or concern; secondly, after the stock reform of Bank of China and CCB, a large number of non-performing assets were divested and written off, and it cannot be ruled out that normal loans were classified as non-performing by using the opportunity of divestment and write-off to "reserve" for future assessment and adjustments. Adjustment. III. Five-level classification standards and management requirements (I) Classification standards. According to the Guiding Principles for Five-Level Classification of Loans, commercial bank loans are categorized into five types, i.e., normal, concern, substandard, doubtful, and loss, with the last three types being non-performing loans. Commercial banks have refined their classification criteria in accordance with this classification scheme and in conjunction with the actual situation of their own banks, and their classification criteria and main features are as follows: 1. Normal category: the borrower is able to fulfill the contract, and has full assurance of repaying the principal and interest on time and in full, and there is no reason to doubt the repayment of the principal and interest of the loan. 2. 2. Category of concern: Although the borrower is currently capable of repaying the principal and interest of the loan, there are some factors that may adversely affect the repayment. Loans issued in violation of national laws and regulations; loans that are 90 to 180 days overdue; and mortgages to enterprises that have maliciously evaded bank debts by using enterprise mergers, reorganizations, and spin-offs should at least be classified into the category of concern and classified according to the actual repayment ability after recovery in accordance with the law. The loss rate of loans in this category shall not exceed 5%. Its basic characteristics: ◇Decrease in net cash flow; ◇The borrower's sales revenue and operating profit are declining or the net worth is beginning to decrease, or there are signs of insufficient liquidity; ◇Changes in the external environment, such as the macroeconomy, market, and industry, have an unfavorable impact on the borrower and may affect the borrower's solvency, for example, the position of the industry in which the borrower has been out is on a downward trend; ◇The borrower's key financial indicators, such as: liquidity ratio, asset-liability ratio, sales profitability ratio and inventory turnover ratio are lower than the industry average or have dropped considerably; ◇Major unfavorable changes have occurred in the Borrower's major shareholders, affiliates, or parent and subsidiary companies; ◇The Borrower's fixed asset projects have undergone major adjustments that are unfavorable to the repayment of the loan, for example, the extension of the construction period of the infrastructural project or the adjustment of the emotional calculation is large in magnitude; ◇The Borrower has failed to use the loan in accordance with the specified purposes; ◇The Borrower's Poor willingness to repay and failure to cooperate actively with the bank; ◇Decline in the value of collateral or pledge for the loan or loss of control over the collateral; ◇Doubt about the financial status of the guarantor of the loan; ◇Lack of effective supervision of the loan by the bank. ◇Incomplete bank credit files, loss of important documents, and substantial impact on repayment; ◇Release of loans in violation of loan procedures. 3. Subordinate category: the borrower's repayment ability has obvious problems, relying on * its normal business income can no longer guarantee the full repayment of principal and interest, even if the implementation of the guarantee may result in certain losses. Loans with interest receivable 90 days past due and principal 181 to 360 days past due should be classified at least in the subprime category. Loans subject to restructuring should be classified at least in the subprime category. Restructured loans are loans for which the bank has made adjustments to the repayment of the loan contract due to the deterioration of the borrower's financial condition or inability to repay. The loss rate of this type of loan is between 30% and 50%. Its main features: ◇The borrower has difficulty in making payments and obtaining new funds in accordance with market conditions; ◇The borrower is unable to repay debts to other creditors; ◇The borrower's internal management problems have not been solved, preventing timely and full settlement of debts; ◇The borrower has used improper means, such as concealment of facts, to obtain loans. ◇The borrower is operating at a loss and has a negative net cash flow; ◇The borrower has been obliged to seek sources of repayment such as auctioning collateral and honoring guarantees. 4. Doubtful category: The borrower is unable to repay the principal and interest in full, and even if the mortgage or guarantee is executed, it is sure to cause a large loss. Loans that are between 360 and 720 days past due should be classified at least in the doubtful category. Restructured loans that are still overdue or where the borrower is still unable to return the loan are classified at least in the doubtful category. The loss ratio of this type of loan is between 50% and 75%. Its main features: ◇the borrower is in the state of stopping or semi-suspension of production; ◇loan projects such as infrastructure projects are in the state of stopping and slowing down; ◇the borrower is insolvent; ◇the bank has resorted to the law to recover the loan; ◇the loan is still overdue after reorganization or still cannot return the principal and interest normally, and the ability to repay the loan has not been significantly improved. 5. Loss category: After taking all possible measures and all necessary legal procedures, the principal and interest still cannot be recovered, or only a very small portion can be recovered. Loans overdue for more than 720 days should at least be characterized as loss category. The loss rate of loans in this category is between 95% and 100%. Its main features: ◇The borrower and guarantor declared bankruptcy, and still cannot repay the loan after legal settlement; ◇The borrower died, was declared missing or died, and the loan could not be repaid after settling the loan with its property or inheritance; ◇The borrower suffered from a major natural disaster or accident, and the loss was so huge that the borrower was unable to obtain insurance compensation, and was unable to repay part of the loan or all of the loan; ◇The borrower, though not bankrupt, has existed in name only, or has been closed; ◇Due to planned economy, the borrower is unable to repay part of the loan. ◇The borrower is not bankrupt, but it has existed in name only or has been closed down; ◇The debtor's main body has been extinguished due to historical reasons such as the planned economic system, and there is no debtor main body. (ii) Management requirements. In summary, there are the following basic requirements: First, there should be a sound classification and management system; second, an effective classification organization and management system should be established; third, there should be a unified and standardized classification standard; fourth, all loans should be included in the scope of classification; fifth, they should be classified in accordance with the prescribed standards and procedures; sixth, the timeliness of the classification should be maintained; seventh, the borrower's financial and business management information should be fully grasped to maintain the symmetry of the information of the bank and the enterprise; eighth, the bank and the enterprise should be fully informed; eighth, the borrower's financial and business management information should be fully grasped. enterprise information symmetry; eight, to maintain the integrity and continuity of credit files; nine, to regularly inspect and evaluate the implementation of loan classification policies and procedures. (c) How to carry out on-site inspection on the classification deviation of sampled customers (i) Access the credit file information of the loans of sampled customers to understand the basic situation of the borrowers and enter the basic situation into the "On-site Inspection Operation Sheet on Loan Classification Deviation". (ii) Analyzing and judging the solvency and repayment willingness of the sampled customers. This is the main part of the on-site inspection. The borrower's cash flow, financial and non-financial factors, loan guarantee and bank credit management should be analyzed and judged. 1, cash flow analysis. Cash flow includes cash inflow, cash outflow and net cash flow, net cash flow is equal to the difference between cash inflow and cash outflow. The cash inflow and outflow of the lending enterprise is mainly reflected in the operating activities, investment activities and financing activities in three aspects, through the calculation and analysis of the cash flow of the lending enterprise, to determine whether the borrower can repay the loan and what is the source of repayment, so as to determine the classification of the loan class. In the actual classification operation, the borrower should provide the bank with a cash flow statement or the bank should utilize financial software to automatically generate a cash flow statement. How to determine the loan classification grade based on the borrower's cash flow? Can be judged from the following aspects: (1) the borrower with cash generated by operating activities to repay, and cash flow is relatively stable or in the increase, its loan grade for normal; (2) the borrower, although the cash generated by operating activities to repay, but cash flow from operating activities in the reduction of its loan should be classified as a concern; (3) the borrower can not be used to repay the cash generated by operating activities, but through the sale of securities investment or reduce the capital expenditure on maintenance, renewal and renovation of fixed assets, or even external financing for repayment, its loan should be classified as substandard; (4) the cash inflow generated from external financing of the borrower is still insufficient for repayment, and its loan should be classified as doubtful; (5) the cash generated from the sale of intangible assets and fixed assets by the borrower, or even the cash received from the transfer of shares is insufficient for repayment, and its loan should be classified as loss. If neither the enterprise nor the bank provides a cash flow statement, how should the cash flow be calculated? The calculation of cash flow should be based on the profit and loss statement of the lending enterprise and adjusted according to the changes at the beginning and end of the balance sheet. Its calculation steps and methods: The first step, the calculation of the balance sheet items at the beginning and end of the period changes in the formula: the number of changes in the items = the end of the period - the beginning of the period. The second step, to determine the number of changes in the project is a cash outflow or cash inflow. The increase in asset items is a cash outflow, and vice versa is a cash inflow. For example, an increase in accounts receivable is a decrease in cash from sales (cash outflow); a decrease in accounts receivable is an increase in cash from sales (cash inflow). An increase in liabilities and owner's equity items is a cash inflow, and the opposite is a cash outflow. For example, an increase in accounts payable means that the enterprise has purchased some of its inventory on credit, creating spontaneous financing (cash inflow); a decrease in accounts payable means that the enterprise has paid cash for the unsold portion of its purchased inventory (cash outflow). Step 3: Remove the effects of accruals. Cash flow = Profit or loss - △Assets + △Liabilities (△ indicates the difference between the end of the period and the beginning of the period). ◇Cash flow from operating activities (indirect method), formula: Cash flow from operating activities = Net income + Depreciation and amortization + △Accounts payable + △Expenses payable + △Taxes payable - △Accounts receivable - △Inventory - △Advance payments. ◇Cash flows from investing activities, formula: Cash outflows (inflows) from investing activities = △Fixed assets +△Investments +△Intangible assets. A positive number of △ indicates a cash outflow, while a negative number indicates a cash inflow. ◇Cash flows from financing activities: Cash inflows (outflows) from investing activities = △Long-term liabilities due within one year +△Short-term borrowings +△Long-term liabilities +△Shareholders' equity. A positive number indicates a cash outflow, while a negative number indicates a cash inflow. ◇Net cash flow = cash flow from operating activities + cash flow from investing activities + cash flow from financing activities. 2. Financial analysis. By verifying, calculating, comparing and researching the authenticity of the relevant data and information in the borrower's financial statements, analyzing the borrower's solvency and predicting the future development trend of the borrower, the statements reviewed and verified by a certified public accountant and the relevant information in the same industry should be obtained as far as possible when analyzing the borrower's financial statements. The following three types of indicators are mainly analyzed. (1) Profitability analysis. Mainly from the profit and loss position, sales margin, operating profit margin, net profit margin, cost and expense ratio and other indicators. The formula: sales profit margin = profit / net sales revenue × 100%, the higher the ratio, indicating that the better the product cost control; operating profit margin = pre-tax operating profit / net sales revenue × 100%, the higher the ratio, indicating that the higher the level of profitability of the borrower; net profit margin = net profit / net sales revenue × 100%; cost margin = total profit / total costs × 100%, the higher the ratio, indicating that the same level of profitability of the borrower. The higher the ratio, indicating that the same profits only need to spend less cost expenses. (2) Solvency analysis. Short-term loans should analyze the borrower's short-term solvency, and medium- and long-term loans should analyze the borrower's long-term solvency. Long-term solvency from the balance sheet ratio, liabilities and owners' equity ratio analysis, short-term solvency from the current ratio, quick ratio and other indicators to analyze. Its calculation formula: Asset-liability ratio = total liabilities / total assets × 100%, the lower the ratio, the lower the risk of creditors, the higher the degree of protection of claims; Liabilities and owners' equity ratio = total liabilities / owners' equity × 100%, the lower the ratio, indicating that the borrower's long-term solvency is stronger. Current ratio = current assets/current liabilities, the higher the ratio, the stronger the short-term solvency. Quick Ratio = Quick Assets / Current Liabilities, Quick Assets = Current Assets - Inventory - Prepaid Accounts - Amortized Expenses. The ratio of 1% is the best, if lower, indicating that the borrower's short-term solvency problems, if too high, the borrower has too many quick assets, may lose some favorable profit opportunities. (3) operating capacity analysis. Operating capacity refers to the borrower's asset turnover rate of the relevant indicators reflecting the efficiency of asset utilization, it shows the management of the management ability and the ability to apply the assets. Mainly with asset turnover, return on assets, inventory turnover days and other indicators to analyze. Asset turnover = net sales revenue / average balance of assets × 100%, the higher the ratio, the better the operating efficiency of assets. Return on assets = total profit before tax / average balance of assets × 100%, the higher the ratio, the greater the return on investment in assets. Inventory turnover days = average inventory balance / cost of goods sold × 360, fewer days or a downward trend indicates that the higher the management efficiency. 3, non-financial analysis. Mainly from the borrower's industry risk, business risk, management risk, natural society, willingness to repay and other factors to analyze. (1) Industry risk analysis. Each enterprise is in a specific industry, each industry has its own inherent risks, the same industry in the borrower to face the basic consistent risk. Grasp the characteristics, appearance and degree of risk of a particular industry, know the borrower's performance in the same industry at what level, you can judge the basic risk of the borrower from the industry's basic conditions and development trends. It is mainly analyzed comprehensively from the cost of the borrower's industry, the growth cycle of the industry, the economic cyclicality of the products, the profitability of the industry, the dependence, the substitutability of the products, the legal and industrial policies of the country, the economic environment, the technological environment and so on. When checking, you can refer to the following table: Industry Risk Warning Signals: ◇The industry as a whole is in recession or belongs to an emerging industry; ◇There is a major technological reform, which affects the industry's product and production technology changes; ◇The government has strict restrictions on the industry; ◇Changes in the economic environment, such as an economic recession or the emergence of a financial crisis, which have an adverse impact on the development of the industry; ◇Changes in the national industrial, monetary, taxation and other macro policies have a significant impact on the enterprise; ◇Customer demand have a significant impact; ◇Changes in customer demand; ◇Changes in laws that have a significant impact on the enterprise; ◇Changes in multilateral or bilateral trade policies, restrictions and protection of imports and exports. (2) Business risk analysis. The analysis focuses on the borrower's scale of operation, business strategy, product structure, and the enterprise's "supply, production and marketing". Main risk signals: ◇Significant changes in business activities, suspension of production, semi-suspension of production or cessation of operations; ◇Changes in the nature of business and business objectives; ◇Adverse changes or trends in major data in industry statistics; ◇Inability to adapt to changes in the marketplace or changes in customer demand; ◇Holding a large purchase order, but failing to fulfill the contract due to the impact of production capacity and supply of raw materials, which may result in huge losses; ◇Holding a large order, but failing to fulfill the contract due to the impact of production capacity and supply of raw materials. ◇The products do not have high technological content and are easily eliminated or replaced; ◇The introduction of technology is slow, and there are major weaknesses in the conversion of production technology; ◇Decreased control over inventory, production and sales; ◇Whether there is a single channel for purchasing raw materials, excessive reliance on suppliers, and the supply of raw materials is unable to satisfy normal production or there is a risk in the price of raw materials; ◇Negative change of the enterprise's location, and the distribution of branches or sales network is not appropriate. ◇Irrational distribution of branches or sales networks; ◇The borrower's poor sales promotion ability, frequent failures resulting in product backlogs, and lack of flexible countermeasures against changes in the situation in the sales chain. ◇Enterprises have a greater impact on and are more destructive to the ecological environment; ◇Plant and equipment are not well-maintained and are overloaded; ◇There are deviations in the feasibility of construction projects or major adjustments in the execution of plans, such as the extension of the work period of an infrastructure project or the fact that it is in a state of standstill or the budget is adjusted; ◇Declines in the quality of products and the level of services; ◇Encountering a serious natural disaster or a social catastrophe. (3) Analysis of management risk and willingness to repay. Focus on the analysis from the borrower's organizational form, management quality, management ability and level, and repayment record. Main risk signals: ◇Soundness of the borrower's corporate governance structure, serious disagreement or disharmony among the top management; ◇The management's slow response to the changes in the environment and the industry; ◇The management's low integrity, lack of honesty and cultivation; ◇Frequent changes in the senior management or the board of directors; ◇Weakness of the middle-level management, excessive renewal of the enterprise's personnel or insufficient employees; ◇The management's lack of a ◇Lack of a strategic plan for the development of the enterprise, or the plan has not been implemented or cannot be implemented; ◇Lack of sufficient industry management experience and management ability on the part of the management; ◇Changes in the management's business ideology, which manifests itself in serious short-term behavior, extreme risk-taking or conservatism; ◇Major adverse changes in the borrower's major shareholder(s), affiliates, or parent-subsidiary companies or the existence of connected transactions; ◇The borrower or its major management personnel being involved in a legal dispute or legal problems. ◇The borrower or main managers are involved in legal disputes or legal problems, such as being punished by administrative agencies such as tax, industry and commerce, or being prosecuted, executed, seized, frozen or examined by judicial organs; ◇The borrower has poor willingness to repay the loan and adopts a non-cooperative attitude towards the bank; ◇The borrower provides false financial statements and business management information; ◇The borrower suddenly replaces the certified public accountant or the bank of the clearing account; ◇An external agency makes adjustments to the borrower's ratings; ◇The borrower reneges on agreements with other banks or creditors and fails to repay other external debts ◇Borrower's breach of agreements with other banks or creditors and failure to repay other external debts; ◇Borrower's obtaining of loans from other banks by unusual means or unreasonable conditions and methods; ◇Borrower's refusal to take out loans from other banks; ◇Borrower's declining balance of deposits and settlements; ◇Borrower's inability to provide the information and materials required by the bank, such as supply and sales contracts and progress reports on the project; ◇Borrower's delays in payment of the principal of the loan, interest, or fees. ◇The borrower proposes in financing or restructuring the loan. 4. Loan guarantee analysis. The borrower's guarantee is the second source of repayment of the loan. If the borrower's business condition deteriorates and he cannot repay the loan with his normal business income, he has to consider repaying the loan with the guarantee mortgage. By checking the legality and validity of the secured mortgage contract, the adequacy of the collateral, the realizable capacity of the collateral and the control of the collateral, the possibility of the borrower repaying the principal and interest of the loan will be analyzed and the loan classification grade will be judged. During the inspection, a combination of internal and external inspection methods should be adopted to first analyze the mortgage and guarantee documents and information provided by the bank, which should include the mortgage contract, guarantee contract, mortgage appraisal report, certificate of property ownership, financial statement of the guarantor, credit rating, external audit report, and so on. Then go to the field to inspect the custody of collaterals and pledges, test the value of collaterals as well as analyze the guarantor's financial strength and willingness to perform. (1) Legitimacy of guarantee. Mainly check whether the main body of the guarantee complies with the provisions of the Guarantee Law. First, whether the guarantor is qualified. State organs, schools, kindergartens, hospitals and other public welfare institutions, social organizations, unauthorized branches of corporate entities, functional departments can not serve as a guarantor, whether the guarantor and the borrower is an affiliated enterprise. Second, whether the collateral is legal. Land ownership; arable land, residential land, self-reserved land, self-reserved mountains and other collectively owned land use rights; schools, kindergartens, hospitals and other institutions for the public welfare, social organizations, educational facilities, medical and health care facilities and other public welfare facilities; ownership, right of use of property is unknown or disputed; according to the law by the seizure, impoundment, supervision of the property; according to the law shall not be mortgaged other property such as national Products whose production is expressly prohibited, etc. cannot be used as collateral for loans. (2) The validity of the guarantee. Mainly check whether the guarantee security in the law whether to produce security effect, a guarantee security procedures are legally effective. Look at the guarantee, mortgage, pledge contract elements are complete, whether the semantics of the contract terms are accurate, without the written authorization of the legal person or beyond the scope of authorization and the creditor to enter into a guarantee contract; seal and signature is stamped with the guarantor or mortgagor of the legal person, and by the guarantor, mortgagor's legal representative or authorized agent to sign his or her name; with the state-owned land on the house mortgage, the right to use the land is mortgaged at the same time ; whether the collateral is subject to mortgage registration procedures by the competent authorities; whether stop payment and freezing procedures are carried out for depository receipts, bills, securities, equity and other rights pledged; whether the creditor's agreement with the debtor to change the loan contract obtains the guarantor's written consent, and whether the mortgaged and pledged items are insured; and whether the statute of limitations of the secured mortgage is legally effective. Whether the time agreed in the guaranteed mortgage contract is consistent with the loan term and whether it has expired; whether the guaranteed mortgage contract has been re-signed with the borrower after the expiration of the guaranteed mortgage contract or more than six months. (3) Adequacy of guarantee. First, whether the guarantor has the ability to guarantee. Judging from the guarantor's finance, cash flow, contingent liabilities, credit rating and the number and amount of guarantees currently provided by the guarantor, whether the guarantor has the ability to fulfill the repayment; secondly, whether the value of the collateral is sufficient; thirdly, whether the collateral has been evaluated by the authorized appraisal department and professional appraisal personnel, and whether the value of the collateral has been overestimated; and fourthly, whether the collateral has been double-pledged. (4) Liquidity of the collateral. Mainly from the liquidity of the collateral and the impact of the collateral's liquidity value of the comprehensive analysis of the factors affecting the liquidity value of the collateral are the quality of the collateral is good or bad, whether to insure, the economic situation, market demand and so on. (5) The ability to control the collateral. First, whether the safe custody measures of the collaterals have been established; second, whether double control is implemented on the access, physical and accounts of the collaterals; third, whether regular evaluation of the collaterals is conducted; fourth, whether the borrower is required to supplement new collaterals in a timely manner after the decrease in the value of the collaterals. (6) Criteria for classification of guarantees and loans. If the bank loses control of the collateral or the value of the collateral decreases, if it will affect the repayment of the loan but does not result in loan losses, it should be recognized as at least a category of concern, and if it will result in loan losses it should be classified into grades based on the degree of loss and in accordance with the standards stipulated in the Guiding Principles for Classification of Loan Risks. 5. Bank credit management analysis. Mainly from the compliance of loan investment, credit file management integrity and authenticity of the analysis. (i) Compliance of loan investment and risk classification. Compared with general loans, the issuance of irregular loans in addition to bear the risk of normal occurrence due to the loan business, but also need to bear additional legal risks, which makes the risk of the loan amplified, affecting the normal repayment of loans, and some violations caused by the risk has been very serious. Therefore, all irregular loans should be categorized as follows of concern, even if the repayment of the loan is still sufficiently assured from the immediate point of view. Non-compliant loans generally include: credit loans to related persons, guaranteed loans granted to related persons on terms better than those of similar loans, as well as loans for which interest is charged on the basis of the loan, extension of the loan in violation of the law (cf. Interim Measures for the Determination of Non-performing Loans), violation of the national interest rate regulations and loans for which the borrower does not have the qualifications and conditions stipulated in the General Principles of Loans. (ii) Integrity and authenticity of credit file management and risk classification. The credit management department of the bank should formulate a credit file management system to establish a complete file for each borrower, and the credit personnel have the responsibility to ensure the completeness and authenticity of the credit files of the customers, and if important legal documents are missing or there are misleading legal liabilities unclear loans should be categorized at least below the category of concern. Generally, the credit file should cover at least the following six aspects: ◇Basic customer information: the borrower's name, address, type of business and the industry in which it operates, the scope of business operations and the main business; the organizational structure, the situation of the owners and senior managers and the situation of the subsidiary institutions; the borrower's business history, credit rating, and the guarantor's basic situation. ◇Financial information of the borrower and guarantor: balance sheet, profit and loss account, cash flow statement, report of external auditor, other financial information such as financing with other financial institutions. ◇Important legal documents: loan application; pre-credit investigation report and approval documents, including feasibility bank analysis report for long-term loans, project documents and approval documents from higher-level banks; loan contract, credit line or authorization letter of credit; legal documents for loan guarantees, including mortgage contract, letter of guarantee, appraisal report of collateral, property ownership certificates, e.g., land deeds, real estate certificates and other proof of collateral rights; repayment plan of borrower and repayment commitment. ◇Correspondence: records of credit staff's visits and examinations, memos, etc. ◇Borrower's repayment records and bank reminders. ◇Loan inspection reports: regular and irregular credit analysis reports and internal audit reports. (iii) Identifying and categorizing the loans of sampled customers in accordance with the five-level classification principle and requirements. (iv) Comparison with the five-level classification conclusions of the inspected institution on the loans of the sampled customers. (e) Examining the problems that exist in the "three investigations" and the management of the five-level classification of the loans of the sampled clients by the banks that handle the loans of the sampled clients. The main focus of the inspection is on the following nine aspects: 1. Soundness of the system. Whether the management system for the five-level classification of loans has been established and improved, including the policies and procedures for the management and assessment of collateral. The classification management system should cover classification standards, operating procedures, job responsibilities, accountability, etc.; 2. Effectiveness of the organization and management system. Whether an effective classification organization and management system has been set up in accordance with the principle of internal control, so that the classification work has independence and mutual constraints; 3. Uniformity and standardization of classification standards. Whether the five-level classification standards for loans formulated by each commercial bank are lower than those stipulated in the Guiding Principles for Five-Level Classification of Loans, and whether the standards actually implemented by each branch are consistent; 4. Compliance with classification methods and classification procedures. Whether loans are identified and classified in accordance with the prescribed classification methods and procedures, and whether there is any simplification of the classification procedures and standards or ultra vires identification and classification; 5. Comprehensiveness of classification. Whether the full-caliber loans as defined in the General Principles of Loans are included in the five-level classification of loans, and whether there are cases in which some loans, such as discounts, credit card overdrafts, various types of off-balance-sheet business advances, entrusted loans, and special loans, are excluded from the scope of classification; 6. Timeliness of classification. Whether the classification is recognized and reported for approval in a timely manner, and whether the classification results are adjusted in real time according to the actual operating conditions of the borrower; 7. Integrity and continuity of credit file management. Whether the credit file management system is continuous, complete and true, and whether there is any failure to timely supervise the borrowers to provide true and accurate financial and other operation and management information; 8. The effectiveness of supervision and inspection of the classification work. Whether the internal audit department regularly and irregularly inspects and evaluates the implementation of classification policies and procedures, and makes a written report of the inspection results to the higher-level bank; 9. Other issues. Such as ineffective management and inaccurate evaluation of collaterals; failure of credit managers to report timely and accurate true information about borrowers; insufficient provisioning for loan losses, etc. (vi) Proposing a regulatory opinion to change the conclusion of the classification of that loan. (vii) Proposing supervisory opinions and recommendations to strengthen the management of the loan and the five-level classification management of the loan.