All About Business & Information: Personal Loan

Operating Ratio (OR)

This ratio is used to measure operational efficiency and effectiveness of a company by comparing one line to another. (Dendawijaya, 2005:119). The ratio of operational costs is the ratio between operating costs with operating revenues. That is, the lower the more efficient means BOPO bank's performance in controlling operational costs, with the cost efficiency of the bank's profits will be even greater.

Loan to Deposit Ratio (LDR)
This ratio is used to measure how far the bank's ability to repay all the public funds and its own capital by relying on credit that has been distributed to the public. In other words the bank can meet its short-term obligations, such as the release of funds to repay depositors when billed and can provide credit request has been submitted. According Riyadi (2004:147), LDR can be used as performance measures of institutional intermediary institutions linking those excess funds (surplus units of funds) with those who need funds (unit deficit of funds).

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According Siamat (2005:358):

"Non-Performing Loan or bad debts, often called can be defined as a loan repayment difficulties as a result of deliberate action and the factors or due to external factors beyond control of the debtor".

This ratio shows the bank management's ability to manage problem loans given by banks. That is, the higher this ratio the more the worse the quality of bank loans that caused the amount of bad debts, the greater the chances of a troubled bank in a growing condition of the harm done by bad credit returns.
If the credit associated with the level of collectibility, it is classified as non performing loans are loans that have the quality of special concern (special mention), less smooth (substandard), doubtful (Doubtful), and the bad (loss).

Tag : Personal Loan Performing, understanding NPL, personal loan process