The bank has a small number of loan accounts on the books that are no longer collectable and have had no activity in several years. They want to delete them from the loan mainframe but will keep hard copy of the status of the account in the file. Could there be any issues with removing the information from the mainframe? Thanks.

You would need to treat these loans like your bank normally treats charge offs.
There are a lot of banking systems out there but I would guess that just 'deleting' these loans off of your 'mainframe' is not appropriate and your bank should have written procedures on how to handle charge off loans.

Brody - Sooner Fran is right. You can't just delete those loans. We had the same problem with charge-off loans on our system. We had charge-off loans dating back 10-15 years past the date of charge-off or past the date of last payment and they kept them on the system for info purposes. There was no procedure in place to "purge" these loans off the system once they were no longer collectable. We contacted the Accounting Department and worked with them on the best way to purge, because you can't delete them from the system without their knowledge. But you are right these loans do not have to stay on your system.

Two areas you may want to consider - one is they still may be on the credit bureau (unless over 7 years old) and someone may contact you - also there may be some state record retension requirements.

With the oldies, there are companies that thrive on resurrecting the old loans and you might be able to sell them. They pay pennies on the dollar, but it's some recovery.