Credit Risk Management Practices in Selected Private Sector Banks in India: An Empirical Assessment

Abstract

Good risk management of credit is vital for the asset quality, non performing asset control and financial stability of banks. The study focuses on the credit risk identification, appraisal, monitoring, internal controls, recovery mechanisms of selected private sector banks in India with respect to the credit risk management. The study is descriptive and empirical in design with the use of structured questionnaire distributed to 100 respondents of bank employees obtained by purposive sampling. Data analysis includes percentage analysis, mean scores and hypothesis testing. The results show that the credit appraisal and the internal control are relatively well developed while early warning systems, monitoring of problem, and employees training need further development. The study suggests to augment the risk assessment, technological monitoring and recovery processes, so as to improve credit quality and banking performance.