A Non-performing loan is a loan

Loan

A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender and the borrower....

 that is in default

Default (finance)

In finance, default occurs when a debtor has not met his or her legal obligations according to the debt contract, e.g. has not made a scheduled payment, or has violated a loan covenant of the debt contract. A default is the failure to pay back a loan. Default may occur if the debtor is either...

 or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract

Contract

A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...

 terms.

“A loan is nonperforming when payments of interest and principal are past due by 90 days or more, or at least 90 days of interest payments have been capitalized, refinanced or delayed by agreement, or payments are less than 90 days overdue, but there are other good reasons to doubt that payments will be made in full” (IMF)

By Bank regulatory definition non-performing loans consist of:

• other real estate owned which is that taken by foreclosure or a deed in lieu of foreclosure,
• loans that are 90 days or more past due and still accruing interest, and
• loans which have been placed on nonaccrual (i.e., loans for which interest is no longer accrued and posted to the income statement).