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Institutions classify direct and contingent loans granted to non-financial sector individuals or legal entities as Commercial, Consumer and Housing, according to the destination of the loans.
The breakdown of the categories and criteria to rate each type of debtor and portfolio can be found in the regulations of the Superintendency.
Category 2A - Debtors with adequate payment capacity: Customers who may encounter some difficulties, less than 30 days behind on their payments or 60 days behind in delivering the information requested. Category 2B - Debtors with potential problems to pay: Debtors who may run into difficulties, less than 60 days behind on their payments.
Where there are multiple shareholders this can be highly efficient.
In these cases, operations can be classified according to their own risk, independently to that of the debtor.
It is common that these loans have better ratings than those of their debtors.
For example, a category 3 debtor (with compromised repayment capacity) could have a category 1A loan (with approved self-liquidating guarantees), this could be the case of an exporter that shipped its products and gave its lending institution an irrevocable documentary credit, confirmed by a foreign bank with good credit rating.
It could also happen that the debtor agrees with its bank to repay the loan in several installments, thus the operation is structured in a way that the bank collects the debtors sales, under certain conditions, to ensure a successful recovery of the debt.