Finance receivables, net consist of retail and dealer accounts including accrued interest and deferred fees and costs, net of deferred income and the allowance for credit losses. Pledged receivables represent retail loan receivables that have been sold for legal purposes to securitization trusts but continue to be included in our consolidated financial statements. Cash flows from these pledged receivables are available only for the repayment of debt issued by these trusts and other obligations arising from the securitization transactions. They are not available for payment of our other obligations or to satisfy claims of our other creditors.

(Dollars in millions)			September 30, 2012		March 31, 2012
Retail receivables			$	37,371	$	35,020
Pledged retail receivables				10,345		10,726
Dealer financing				13,956		12,865
				61,672		58,611

Deferred origination (fees) and costs, net				637		639
Deferred income				(759)		(684)
Allowance for credit losses
	Retail and pledged retail receivables			(338)		(405)
	Dealer financing			(122)		(119)
		Total allowance for credit losses		(460)		(524)
Finance receivables, net			$	61,090	$	58,042

Finance receivables, net and retail receivables presented in the previous table includes direct finance leases, net of $220 million and $213 million at September 30, 2012 and March 31, 2012, respectively.

We are exposed to credit risk on our finance receivables. Credit risk is the risk of loss arising from the failure of customers or dealers to meet the terms of their contracts with us or otherwise fail to perform as agreed.

While we use various credit quality metrics to develop our allowance for credit losses on the retail loan and commercial portfolio segments, we primarily utilize the aging of the individual accounts to monitor the credit quality of these finance receivables. Based on our experience, the payment status of borrowers is the strongest indicator of the credit quality of the underlying receivables. Payment status also impacts charge-offs.

Individual borrower accounts for each class of finance receivables within the retail loan and commercial portfolio segments are segregated into one of four aging categories based on the number of days outstanding. The aging for each class of finance receivables is updated quarterly.

For the three classes of finance receivables within the dealer products portfolio segment (wholesale, real estate and working capital), all loans outstanding for an individual dealer or dealership group, and affiliated entities, are aggregated and evaluated collectively by dealer or dealership group. This reflects the interconnected nature of financing provided to our individual dealer and dealer group customers, and their affiliated entities.

When assessing the credit quality of the finance receivables within the dealer products portfolio segment, we segregate the finance receivables account balances into four distinct credit quality indicators based on internal risk assessments. The internal risk assessments for all finance receivables within the dealer products portfolio segment are updated on a monthly basis.

The tables below present each credit quality indicator by class of finance receivables as of September 30, 2012 and March 31, 2012:

		Retail Loan				Commercial
(Dollars in millions)		September 30, 2012		March 31, 2012		September 30, 2012		March 31, 2012

Aging of finance receivables:
	Current	$	46,648	$	44,842	$	350	$	352
	30-59 days past due		550		433		10		8
	60-89 days past due		113		80		1		2
	90 days past due		44		28		-		1
Total		$	47,355	$	45,383	$	361	$	363

		Wholesale				Real Estate				Working Capital
(Dollars in millions)		September 30, 2012		March 31, 2012		September 30, 2012		March 31, 2012		September 30, 2012		March 31, 2012

Credit quality indicators:
	Performing	$	7,167	$	6,249	$	3,872	$	3,746	$	1,585	$	1,422
	Credit Watch		664		675		495		467		58		61
	At Risk		39		78		34		148		25		8
	Default		9		6		1		-		7		5
Total		$	7,879	$	7,008	$	4,402	$	4,361	$	1,675	$	1,496

Note 4 – Finance Receivables, Net (Continued)

Impaired Finance Receivables

The following table summarizes the information related to our impaired loans by class of finance receivables as of September 30, 2012 and March 31, 2012:

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
	September 30,		March 31,		September 30,		March 31,		September 30,		March 31,
(Dollars in millions)	2012		2012		2012		2012		2012		2012

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	35	$	7	$	35	$	7	$	4	$	1
Real estate		35		136		35		136		12		37
Working capital		30		7		30		7		29		7
Total	$	100	$	150	$	100	$	150	$	45	$	45

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	57	$	60	$	57	$	60
Real estate		100		-		100		-
Working capital		1		1		1		1
Total	$	158	$	61	$	158	$	61

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	471	$	502	$	466	$	496
Commercial		1		1		1		1
Total	$	472	$	503	$	467	$	497

Total impaired account balances:

Retail loan	$	471	$	502	$	466	$	496
Commercial		1		1		1		1
Wholesale		92		67		92		67
Real estate		135		136		135		136
Working capital		31		8		31		8
Total	$	730	$	714	$	725	$	708

The following table summarizes the average balance of finance receivables determined to be impaired as of the balance sheet date and the interest income recognized on impaired finance receivables for the three and six months ended September 30, 2012 and 2011:

	Average Impaired Finance Receivables								Interest Income Recognized
	Three Months Ended September 30,				Six Months Ended September 30,				Three Months Ended September 30,				Six Months Ended September 30,
(Dollars in millions)	2012		2011		2012		2011		2012		2011		2012		2011

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	30	$	8	$	22	$	8	$	-	$	-	$	-	$	-
Real estate		86		134		103		134		-		2		1		3
Working capital		30		8		23		9		1		-		1		-
Total	$	146	$	150	$	148	$	151	$	1	$	2	$	2	$	3

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	61	$	32	$	61	$	39	$	1	$	-	$	1	$	1
Real estate		50		2		33		2		2		-		2		-
Working capital		1		1		1		1		-		-		-		-
Total	$	112	$	35	$	95	$	42	$	3	$	-	$	3	$	1

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	473	$	572	$	483	$	575	$	9	$	12	$	19	$	24
Commercial		1		1		1		1		-		-		-		-
Total	$	474	$	573	$	484	$	576	$	9	$	12	$	19	$	24

Total impaired account balances:

Retail loan	$	473	$	572	$	483	$	575	$	9	$	12	$	19	$	24
Commercial		1		1		1		1		-		-		-		-
Wholesale		91		40		83		47		1		-		1		1
Real estate		136		136		136		136		2		2		3		3
Working capital		31		9		24		10		1		-		1		-
Total	$	732	$	758	$	727	$	769	$	13	$	14	$	24	$	28

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three and six months ended September 30, 2012 and September 30, 2011 is not significant for each class of finance receivables. Troubled debt restructurings for these accounts within the retail loan class of finance receivables are comprised exclusively of contract term extensions that reduce the monthly payment due from the customer, while accounts within the commercial class of finance receivables consist of contract term extensions, interest rate adjustments, or a combination of the two. For the three classes of finance receivables within the dealer products portfolio segment, troubled debt restructurings include contract term extensions, interest rate adjustments, waivers of loan covenants, or any combination of the three. Troubled debt restructurings of accounts not under bankruptcy protection did not include forgiveness of principal during the three and six months ended September 30, 2012 and September 30, 2011.

We recognize finance receivables under bankruptcy protection within the retail loan and commercial classes as troubled debt restructurings as of the date we receive notice of a customer filing for bankruptcy protection regardless of the ultimate outcome of the bankruptcy proceedings. The bankruptcy court may impose modifications as part of the proceedings, including interest rate adjustments and forgiveness of principal. For the three and six months ended September 30, 2012 and September 30, 2011, the financial impact of troubled debt restructurings related to accounts under bankruptcy protection was not significant to our Consolidated Statement of Income and Consolidated Balance Sheet.

Finance receivables modified as troubled debt restructurings for which there was a payment default during the six months ended September 30, 2012 and September 30, 2011, and for which the modification occurred within twelve months of the payment default, were not significant for all classes of such receivables.