In some instances, when a depository institution borrower cannot make the promised principal and interest payment on

Question:

In some instances, when a depository institution borrower cannot make the promised principal and interest payment on a loan, the bank will extend another loan for the customer to make the payment.
a. Is the first loan classified as a nonperforming loan?
b. What is the rationale for this type of lending?
c. What are the risks in this type of lending?