DOI: 10.36347/sjebm.2018.v05i03.003

Pages: 150-157

Credit risk management has become a crucial factor for financial institutions, especially for banks, since financial services sectors have become more exposed towards uncertainty. Bank is the financial institution which is more exposed towards credit risk compared to NBFIs. The research objective is formulated in order to obtain a better understanding of credit risk management and its impact on bank’s performance (return on equity). The hinge of this study is to have a transparent view of how banks manage their credit risk and how the efficiency of managing this risk is being reflected by the financial performance of banks. We also compared the NPL with total loan outstanding using 5 year’s data starting from 2011-2015. To dig deeper survey was conducted on 12 banks (6 state owned and 6 private commercial banks which were selected randomly). From each bank 10 respondents helped us to gather information. Different statistical tools have been used such as mean, standard deviation, regression analysis, one way ANOVA etc. The trend between NPL to loans ratio and ROE has also been shown to reveal the recent scenario. Principal component analysis has been used for analysis of primary data. The aim of the research is to provide stakeholders with precise information regarding the credit risk management of commercial banks with its impact on profitability (ROE)