📊 Credit Quality Classification (Indonesia – OJK)
| Level | Quality | Explanation |
|---|---|---|
| 1 | Lancar (Current) | Debtor pays principal and interest on time. No arrears. |
| 2 | Special Mention | Arrears of principal and/or interest between 1–90 days. Under special monitoring. |
| 3 | Substandard | Arrears of principal and/or interest between 91–120 days. Payment irregularities. |
| 4 | Doubtful | Arrears of principal and/or interest between 121–180 days. Doubtful repayment capacity. |
| 5 | Loss (Default) | Arrears of principal and/or interest more than 180 days. Default status. |
📌 Additional Notes
- Importance of Collectibility: Credit status is recorded in SLIK OJK (formerly BI Checking). Poor quality (level 3 and above) makes future loan approval very difficult.
- Restructuring: Banks may restructure loans to help debtors return to level 1, provided there is good faith and repayment ability.
🔑 Practical Implications
- Audit Impact: Credit quality is a key indicator in risk assessment and financial reporting of banks.
- Database Systems: Credit quality levels are usually auto‑tagged in core banking systems to trigger provisioning (loan loss reserves).
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