Evaluation of credit risk management practices of state bank of india in lucknow circle uttar pradesh

Abstract

Banks play a crucial role in growth and sustainability of any economy as prime intermediaries newlinein mobilizing resources and channeling resources to various sectors of the economy. Therefore newlinehealth of banks has a direct bearing on the health of economy. Prior to 1990 health of Indian newlinebanks was generally measured by growth of the bank and profits earned. Growth was computed newlinein terms of assets (Loans and advance made), Liabilities (deposits mobilized from public) and newlinegeographic coverage (number of branches) without any reference to the impaired assets and newlinecapital. Bank started adopting best international practices in accounting, disclosure and newlinemeasuring health of the banks in terms of capital adequacy, unimpaired tier one capital, level of newlineprovisions to total advances, share of nonperforming assets to total advances and the quality of newlineadvances etc. newlineThe high level of NPAs and fresh generation of NPAs are a natural result of poor and slow newlinedecision making regarding fresh sanction of advances and acceptance of compromise proposals. newlineTherefor it becomes necessary to find out the reasons why the credit risk management practices newlineare not helpful in reducing the NPAs and preventing further generation of NPAs. newlineThe study attempts to find out the existing practices of Credit Risk Management in State Bank newlineof India to avoid, mitigate and control credit risk, recurring common risk incidents and the newlinecauses for the same, constraints in implementing effective credit risk management system and newlinethe importance of human factor in building effective credit risk management system. newlineState Bank of India Lucknow Circle was chosen for the study. Apart from review of the existing newlinepractices in State Bank of India, a survey using a structured questionnaire was conducted newlinecovering officers who work in credit risk related areas. A sample size of 262 was chosen and newlinecollected data was statistically treated as appropriate and required for the study like newlinedetermination of relationship between variables, effect of components on the overall value, newlineidentificati