IDEAS home Printed from https://ideas.repec.org/a/pet/annals/v14y2014i1p353-362.html
   My bibliography  Save this article

Problems and obstacles in credit risk management in indian public sector banks

Author

Listed:
  • Renu Arora

    (University of Delhi, India)

  • Archana Singh

    (Delhi Technological University, India)

Abstract

This paper evaluates the credit risk management (CRM) practices of Indian public sector banks in grant of commercial loans to find the grey areas which need review and restructuring to improve banks’ asset quality. Based on literature review, a conceptual model of credit risk management systems for commercial loans, of Indian public sector banks, has been developed. This model has been used to underline the problems areas and obstacles in credit risk management through comparison of large and small banks. The empirical comparison of CRM practices of Indian public sector banks has resulted into emergence of various grey areas, like insufficient training, data management, inappropriate IT support, system disintegration, inconsistent rating approaches, which need immediate attention and if tackled properly, can reduce their non-performing assets.

Suggested Citation

  • Renu Arora & Archana Singh, 2014. "Problems and obstacles in credit risk management in indian public sector banks," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 14(1), pages 353-362.
    • Handle: RePEc:pet:annals:v:14:y:2014:i:1:p:353-362
    as

    Download full text from publisher

    File URL: http://upet.ro/annals/economics/pdf/2014/part1/Z.%20Arora-Singh.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hennie Van Greuning & Sonja Brajovic Bratanovic, . "Analyzing Banking Risk : A Framework for Assessing Corporate Governance and Risk Management, Third Edition," World Bank Publications, The World Bank, number 2618, September.
    2. Hussein A. Hassan Al-Tamimi & Faris Mohammed Al-Mazrooei, 2007. "Banks' risk management: a comparison study of UAE national and foreign banks," Journal of Risk Finance, Emerald Group Publishing, vol. 8(4), pages 394-409, August.
    3. Ana Paula Matias Gama & Helena Susana Amaral Geraldes, 2012. "Credit risk assessment and the impact of the New Basel Capital Accord on small and medium‐sized enterprises," Management Research Review, Emerald Group Publishing Limited, vol. 35(8), pages 727-749, July.
    4. Kosmas Njanike, 2009. "The Impact of Effective Credit Risk Management on Bank Survival," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 9(2), pages 173-184.
    5. Ramachandran, Ramakrishnan & Senthil Kumar, T. S., 2006. "Micro finance," MPRA Paper 54548, University Library of Munich, Germany.
    6. Saibal Ghosh, 2011. "A simple index of banking fragility: application to Indian data," Journal of Risk Finance, Emerald Group Publishing, vol. 12(2), pages 112-120, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Riaz, Samina & Khan, Muhammad Irfan & Iqbal, Athar, 2018. "Risk Management Practices and Islamic Bankers’ Perception about Potential Risk in Islamic Countries," MPRA Paper 103103, University Library of Munich, Germany, revised 20 Dec 2018.
    2. Rubén Chavarín, 2020. "Risk governance, banks affiliated to business groups, and foreign ownership," Risk Management, Palgrave Macmillan, vol. 22(1), pages 1-37, March.
    3. Nadia Zrelli & Imene Berguiga & Ali Abdallah & Philippe Adair, 2017. "Risques spécifiques et profitabilité des banques islamiques en région MENA," Post-Print hal-01667423, HAL.
    4. Imène BERGUIGA & Philippe ADAIR, 2019. "The performance of Islamic banks in the MENA region: Are specific risks a minor attribute?," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 49, pages 5-23.
    5. Yulita Wulandari & Musdholifah & Suhal Kusairi, 2017. "The Impact of Macroeconomic and Internal Factors on Banking Distress," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 429-436.
    6. Lim, Terence & Lo, Andrew W. & Merton, Robert C. & Scholes, Myron S., 2006. "The Derivatives Sourcebook," Foundations and Trends(R) in Finance, now publishers, vol. 1(5–6), pages 365-572, April.
    7. Zia Ur Rehman & Noor Muhammad & Bilal Sarwar & Muhammad Asif Raz, 2019. "Impact of risk management strategies on the credit risk faced by commercial banks of Balochistan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-13, December.
    8. Ciprian Mihăilescu & Corina Ducu, 2011. "Internal Audit - A Key Element Of Corporate Governance In Credit Institutions," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(13), pages 1-21.
    9. Mirela Monea, 2016. "Performance Indicators from Banking System," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 16(2), pages 69-76.
    10. Mehmood, Mian Saqib & Sheraz, Iram & Mehmood, Asif & G. Mujtaba, Bahaudin, 2017. "Empirical Examination for Operational and Credit Risk Perspective – A Case of Commercial Banks of Pakistan," MPRA Paper 80491, University Library of Munich, Germany.
    11. Waqas Ali & Shujahat Ali & Shahid Mehmood, 2020. "Effect of Risk Management Practices on Banks Performance Moderating Role of Managerial Expertise as a Competitive Edge," IBT Journal of Business Studies (JBS), Ilma University, Faculty of Management Science, vol. 16(1), pages 88-100.
    12. Nirmal Singh, 2021. "Bank Stability and its Determinants in the Nepalese Banking Industry," NRB Economic Review, Nepal Rastra Bank, Economic Research Department, vol. 33(1-2), pages 14-44, October.
    13. Ellis Kofi, Akwaa-Sekyi & Portia, Bosompra, 2015. "Determinants of business loan default in Ghana," MPRA Paper 71961, University Library of Munich, Germany.
    14. Jaya Mathew & Reeba Kurian, 2016. "Engendering Women’s Access to Credit through Financial Inclusion in India," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(6), pages 201-201, June.
    15. Chattha, Jamshaid Anwar & Alhabshi, Syed Musa, 2020. "Benchmark rate risk, duration gap and stress testing in dual banking systems," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    16. Girish Karunakaran Nair & Harsh Purohit & Nidhi Choudhary, 2014. "Influence of Risk Management on Performance: An Empirical Study of International Islamic Bank," International Journal of Economics and Financial Issues, Econjournals, vol. 4(3), pages 549-563.
    17. Charle Augusto Llondono, 2011. "Regresión del cuantil aplicada al modelo de redes neuronales artificiales. Una aproximación de la estructura CAVIAR para el mercado de valores colombiano," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 29(64), pages 62-109, July.
    18. Muhamet Aliu & Arbana Sahiti & Albina Kalimashi, 2019. "Risk Management of Commercial Banks in Kosovo," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 197-212.
    19. Leonid Katranzhy & Oleksandr Podskrebko & Vitaliy Krasko, 2018. "Modelling The Dynamics Of The Adequacy Of Bank'S Regulatory Capital," Baltic Journal of Economic Studies, Publishing house "Baltija Publishing", vol. 4(1).
    20. Jan Dvorsky & József Popp & Zuzana Virglerova & Sándor Kovács & Judit Oláh, 2018. "Assessing The Importance Of Market Risk And Its Sources In Smes Of The Visegrad Group And Serbia," Advances in Decision Sciences, Asia University, Taiwan, vol. 22(1), pages 230-255, December.

    More about this item

    Keywords

    credit appraisal; obstacles in risk management; CRM practices;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pet:annals:v:14:y:2014:i:1:p:353-362. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Imola Driga (email available below). General contact details of provider: http://www.upet.ro/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.