The main objectives of a system of Ioan classification are as follows:
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To highlight those loans that represent an above-normal credit risk;
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To evaluate the degree of risk involved;
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To develop a strategy or action plan for monitoring and follow-up on weak loans and for the recovery or liquidation of impaired loans and other such outstanding credits;
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To provide essential information for the determination of adequate provisions for expected credit losses; and,
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To bring a degree of uniformity and consistency in the method of classification of loans outstanding among Saudi banks.
