Hassan Al-Haifi (wordforword) Oct 29, 2008:

Classifications of Debt This is from the link (http://english.peopledaily.com.cn/200309/06/eng20030906_1238...
"The five-category system classifies bank loans according to their inherent risks as pass, special-mention, substandard, doubtful and loss.

"Pass" indicates that borrowers are able to honor the terms of the contracts and there is no reason to doubt their ability to repay the principal and interest of loans in full and in a timely manner.

"Special-mention" means that borrowers are able to serve their loans currently, although repayment may be adversely affected by specific factors.

"Substandard" means that borrowers' abilities to service their loans are in question. Borrowers cannot depend on their normal business revenues to pay back the principal and interest so lossesmay ensue, even when guarantees are invoked.

"Doubtful" indicates that borrowers cannot pay back the principal and interest in full and significant losses will be incurred, even when guarantees are invoked.

"Loss" means that the principal and interest of loans cannot berecovered or only a small portion can be recovered after taking all possible measures and resorting to necessary legal procedures."
Note that the same classifications had already been used by most American banks (Citibank. Bank of America) by the Seventies