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)			June 30, 2013		March 31, 2013
Retail receivables			$	40,001	$	40,508
Pledged retail receivables				8,725		7,669
Dealer financing				15,793		14,995
				64,519		63,172

Deferred origination (fees) and costs, net				637		634
Deferred income				(821)		(794)
Allowance for credit losses
	Retail and pledged retail receivables			(312)		(338)
	Dealer financing			(112)		(107)
		Total allowance for credit losses		(424)		(445)
Finance receivables, net			$	63,911	$	62,567

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 June 30, 2013 and March 31, 2013:

		Retail Loan				Commercial
(Dollars in millions)		June 30, 2013		March 31, 2013		June 30, 2013		March 31, 2013

Aging of finance receivables:
	Current	$	47,712	$	47,236	$	372	$	362
	30-59 days past due		492		454		6		6
	60-89 days past due		111		87		1		1
	90 days past due		32		31		-		-
Total		$	48,347	$	47,808	$	379	$	369

		Wholesale				Real Estate				Working Capital
(Dollars in millions)		June 30, 2013		March 31, 2013¹		June 30, 2013		March 31, 2013		June 30, 2013		March 31, 2013

Credit quality indicators:
	Performing	$	8,622	$	7,740	$	4,013	$	3,968	$	1,656	$	1,616
	Credit Watch		786		915		535		583		72		80
	At Risk		39		33		28		28		27		28
	Default		4		1		8		1		3		2
Total		$	9,451	$	8,689	$	4,584	$	4,580	$	1,758	$	1,726
¹ Certain prior period amounts have been reclassified to conform to the current period presentation.

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 June 30, 2013 and March 31, 2013:

	Impaired								Individually Evaluated
	Finance Receivables				Unpaid Principal Balance				Allowance
	June 30,		March 31,		June 30,		March 31,		June 30,		March 31,
(Dollars in millions)	2013		2013		2013		2013		2013		2013

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	24	$	16	$	24	$	16	$	4	$	3
Real estate		38		33		38		33		7		7
Working capital		25		24		25		24		24		23
Total	$	87	$	73	$	87	$	73	$	35	$	33

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	55	$	66	$	55	$	66
Real estate		93		97		93		97
Working capital		5		5		5		5
Total	$	153	$	168	$	153	$	168

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	389	$	415	$	385	$	410
Commercial		1		1		1		1
Total	$	390	$	416	$	386	$	411

Total impaired account balances:

Retail loan	$	389	$	415	$	385	$	410
Commercial		1		1		1		1
Wholesale		79		82		79		82
Real estate		131		130		131		130
Working capital		30		29		30		29
Total	$	630	$	657	$	626	$	652

As of June 30, 2013 and March 31, 2013, the impaired finance receivables balance for accounts in the dealer products portfolio segment that were on nonaccrual status was $79 million and $69 million, respectively and there were no charge-offs against the allowance for credit losses. Therefore, the impaired finance receivables balance is equal to the unpaid principal balance.

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 months ended June 30, 2013 and 2012:

		Average Impaired Finance Receivables				Interest Income Recognized
		Three Months Ended June 30,				Three Months Ended June 30,
(Dollars in millions)		2013		2012		2013		2012

Impaired account balances individually evaluated for impairment with an allowance:

Wholesale	$	20	$	23	$	-	$	-
Real estate		36		137		-		1
Working capital		24		31		1		-
Total	$	80		191		1	$	1

Impaired account balances individually evaluated for impairment without an allowance:

Wholesale	$	60	$	60	$	-	$	-
Real estate		96		-		1		-
Working capital		5		1		-		-
Total	$	161	$	61	$	1	$	-

Impaired account balances aggregated and evaluated for impairment:

Retail loan	$	402	$	489	$	8	$	10
Commercial		1		1		-		-
Total	$	403	$	490	$	8	$	10

Total impaired account balances:

Retail loan	$	402	$	489	$	8	$	10
Commercial		1		1		-		-
Wholesale		80		83		-		-
Real estate		132		137		1		1
Working capital		29		32		1		-
Total	$	644	$	742	$	10	$	11

For accounts not under bankruptcy protection, the amount of finance receivables modified as a troubled debt restructuring during the three months ended June 30, 2013 and June 30, 2012 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 months ended June 30, 2013 and June 30, 2012.

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 months ended June 30, 2013 and June 30, 2012, 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 subsequent payment default during the three months ended June 30, 2013 and June 30, 2012, and for which the modification occurred within twelve months of the payment default, were not significant for all classes of such receivables.