Resolving Problem Loans in Commercial Banks: Comparative Evidence from Advanced and Emerging Economies

Non-performing loans (NPLs) weaken bank profitability, liquidity and capital, yet countries use different approaches to reduce them. This article compares the experience of the United States, the European Union, China and selected Asian economies, Kazakhstan and India, and uses Ukraine and Bangladesh to show how classification rules and write-offs can change the reported NPL ratio. The analysis draws on World Bank data, supervisory statistics and official documents. Resolution measures are grouped into three areas: preventing new NPLs, removing problem assets from bank balance sheets, and separate management and recovery. The comparison shows that low or declining NPL ratios are usually associated with a combination of early recognition, adequate provisioning, workable legal procedures and effective recovery or transfer mechanisms. Asset-management companies and state-supported securitization can accelerate balance-sheet clean-up, but their results depend on valuation, creditor rights, insolvency procedures and secondary-market capacity. India also shows that better recognition may initially raise the reported ratio before later improvement. The study is descriptive and does not claim causal effects. Based on the country evidence, practical lessons are identified for emerging banking systems, including Uzbekistan.