NPA Management in India: In Search of a New Paradigm?

Paradigm ◽  
2005 ◽  
Vol 9 (2) ◽  
pp. 64-76
Author(s):  
Alok Pandey ◽  
Syamal K. Ghosh
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Financial Institutions ◽  
Management Practices ◽  
Banking Sector ◽  
Credit Derivatives ◽  
Credit Risk Management ◽  
New Paradigm ◽  
Management Techniques ◽  
Rapid Transformation

The banking & financial sector in India is undergoing rapid transformation Banks & financial institutions have amassed huge NPA's (Non-Performing Assets). This paper presents a comparative analysis of NPA management practices in several Asian countries and seeks to find out whether Indian institutions should emulate these. It also looks at several innovations in NPA and credit risk management techniques at banks & financial institutions in the last decade. This paper also analyzes the efficacy of credit derivatives as a tool for credit risk management and insolvency management in banking and financial institutions. It critically analyzes the evolution, growth and usage of these instruments since their introduction in the banking sector in India.

Credit risk management of Ghanaian listed banks

2016 ◽  
Vol 58 (2) ◽  
pp. 162-178 ◽  
Author(s):  
Michelle Ayog-Nying Apanga ◽  
Kingsley Opoku Appiah ◽  
Joseph Arthur
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Management Practices ◽  
Banking Sector ◽  
Banking Industry ◽  
Credit Risk Management ◽  
Structured Interviews ◽  
Content Type ◽  
Credit Risks ◽  
Commercial Loans

Purpose – The study aims to assess credit risk management practices within financial institutions in Ghana. Specifically, the study compares credit risk management practices of listed banks in Ghana with Basel II (1999). Design/methodology/approach – The analysis is based on data gathered from varied sources, namely, use of questionnaires, analysis of internal credit policies and procedure manuals and semi-structured interviews and discussions with credit risk managers of the selected banks in May 2007 and October 2014. Findings – Overall, the credit risk management practices within listed banks in Ghana are in line with sound practices. The only dissimilarity, however, is the role of the board of directors in defining acceptable types of loans and maximum maturities for the various types of loans. The listed banks in Ghana are also exposed to credit risks associated with granting both corporate and small business commercial loans and the use of collaterals to mitigate their credit risk exposures. Practical implications – Banks in Ghana should consider developing the skills of all their personnel and appropriately motivating those involved in the credit risk management processes to ensure that they carry out this process efficiently. Originality/value – Research into credit risk management in the banking industry from the Ghanaian perspective remains scant. This study is, therefore, timely, and its findings are invaluable for the efficient management of credit risk in the banking industry. This study provides policy recommendations which will enhance shareholder value and, in this way, contribute to greater stability in the banking sector in developing countries, in particular.

scholarly journals The Impact of Credit Risk Management on the Moroccan Commercial Banking Sector

2021 ◽  
Vol 11 (4) ◽  
pp. 5713-5724
Author(s):  
Fatima Bellaali ◽  
Abdelhamid Al Bouhadi
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Management Practices ◽  
Banking Sector ◽  
Commercial Banking ◽  
Credit Risk Management ◽  
Loan Portfolios ◽  
Market Requirements ◽  
The Impact ◽  
Different Sources

The study aimed to analyze the credit risk management practices that the commercial banking sector in Morocco is committed to and their impact on the banking sector.Accordingly, the study reached many conclusions about the importance of applying the mechanism of transferring risks into credit opportunities in the market, which can be achieved through diversifying the bank’s revenue schemes in an optimal manner and correct compatibility with market requirements, which allows the bank to use different sources of interest and fees granted from other areas of service that provided by the Bank, rather than focusing primarily on loan portfolios. In addition, the study highlighted the importance of the relevant specialist within the Bank to deal with more macroeconomic research. Designed for market-based economies, other than adopting credit trend analysis alone, therefore, depreciation of bank assets comes from a variety of market drivers, which have a fundamental role in influencing the credit capabilities of the bank.

scholarly journals Optimization on the Credit Risk of Companies in Malaysia With Data Envelopment Analysis Model

2018 ◽  
Vol 7 (4.11) ◽  
pp. 13
Author(s):  
J. X. Agnes Lai ◽  
J. H. Lam ◽  
W. S. Lam
Keyword(s):  
Risk Management ◽  
Data Envelopment Analysis ◽  
Credit Risk ◽  
Financial Institutions ◽  
Financial Services ◽  
Management Practices ◽  
Data Envelopment Analysis Model ◽  
Data Envelopment ◽  
Credit Risk Management ◽  
Dea Model

Financial institutions provide financial services to their clients or retail customers where money is managed. Credit risk has been identified as one of the dominant risks that affect the performance of a company. A firm’s efficiency with different credit risk management practices is still unknown. This research aims to evaluate the credit risk management and efficiency of the financial institutions that are publicly listed in Bursa Malaysia from year 2013-2016 with the Data Envelopment Analysis (DEA) model. Based on the financial ratios, the DEA model allows the relative efficiency of a set of companies to be assessed by solving a linear programming model. The results show that ALLIANZ, APEX, BURSA, ECM, LPI and TAKAFUL are efficient in terms of their credit risk management. This study identifies the efficient and inefficient financial companies in Malaysia.  

scholarly journals Comparative Analysis of Risk Management Practices of Commercial Banks in Afghanistan

2021 ◽  
Vol 09 (01) ◽  
pp. 110-122
Author(s):  
Waqas Khan ◽  
◽  
Muhammad Tahir ◽  
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Value At Risk ◽  
Management Practices ◽  
Banking Sector ◽  
Credit Risk Management ◽  
Public And Private ◽  
Significant Difference ◽  
Private Banks ◽  
Public Banks

The main objective of the study was to compare the risk management practices of public and private banks and rank different types of risks faced by public and private banks in Afghanistan banking sector. The study empirically tested the level of efficient risk management practices in the banking sector of Afghanistan. A representative sample of 110 individuals was used from both public and private banks. The analysis was based on correlation, regression analysis, and t-statistics. The findings suggest that private banks are more efficient than public banks in terms of risk assessment and analysis, risk monitoring, and credit risk management. Furthermore, RAA, RMON, and CRA are the significant determinants of RMPS. Overall, there is no significant difference in the risk management practices of public and private banks. The study found credit risk, country risk, and liquidity risks as the major risks for the banking sector in Afghanistan. Financial statement analysis, audit and physical staff, and value at risk analysis are the three top instruments respectively for the assessment of risk. This study is the first attempt to understand and analyze the risk management practices of the banking sector of Afghanistan, the results of which will assist various stakeholders of the banking industry in their decision-making process.

An Investigation of Credit Risk Management Strategies of Private Commercial Banks of Bangladesh

2014 ◽  
Vol 2 (2) ◽  
pp. 77-87
Author(s):  
Abu Hanifa Md. Noman ◽  
Md. Amzad Hossain ◽  
Sajeda Pervin
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Commercial Banks ◽  
Management Practices ◽  
Management Practice ◽  
Management Strategies ◽  
Third Party ◽  
Primary Data ◽  
Credit Risk Management ◽  
Risk Management Strategies

Objective - The study aims to investigate credit risk management practices and credit risk management strategies of the local private commercial banks in Bangladesh. Methodology -The investigation is conducted based on primary data collected from a set of both closed end and open end questionnaire from 23 out of 39 local private commercial banks in Bangladesh. Descriptive statistics has been used in processing the data and interpreting the results. Findings - The results reveal that credit risk management practice of the sample banks is sound which is attributed to the appropriate implementation of Basel II and credit risk management guidelines the country's central bank. The findings further show that use of Credit risk grading is most popular and effective criteria for measuring the borrowing capacity of the borrowers. In order to control credit risk and preventing losses from credit exposure banks give more focus on collateralization, accurate loan pricing and third party guarantee. Loan is monitored properly and credit reminder is given to the client if principal and interest remain outstanding for three months. The study further reveals that lack of experienced and trained credit officers, lack of genuine market information and Lack of awareness regarding non-genuine borrower are the most important problems of current credit risk management practices in Bangladesh. Novelty - To the best of the knowledge of the authors the study is the first that investigates credit risk management strategies of private commercial banks, especially on Bangladesh. Type of Paper - Empirical Keyword : Bangladesh; Commercial Bank; Credit risk; Credit risk management; Credit risk management strategies.

Credit Risk Management and Credit Derivatives

2014 ◽  
pp. 499-522
Author(s):  
Jürgen Franke ◽  
Wolfgang Karl Härdle ◽  
Christian Matthias Hafner
Keyword(s):  
Risk Management ◽  
Credit Risk ◽  
Credit Derivatives ◽  
Credit Risk Management

Modern Risk Management Techniques in Banking Sector

2014 ◽  
pp. 186-206
Author(s):  
Okan Acar ◽  
Aslı Beyhan Acar
Keyword(s):  
Risk Management ◽  
Financial Institutions ◽  
Operations Research ◽  
Banking Sector ◽  
Risk Exposure ◽  
New Techniques ◽  
The World ◽  
Risk Definition ◽  
Modern Business ◽  
Management Techniques

Risk management as a very rapid emerging subject has been affected by several happenings in the world. There are many studies covering risk definition, risk types, and risk management, plus there are many contemporary approaches in order to calculate the risk incurred by the companies due to their transactions. In the modern business life, since the transactions have become very fast and their risk exposure increases, the companies, especially the financial institutions, started to use new techniques to measure the probable effects of the risks that they have taken while undertaking the transactions. In this chapter, the authors show two techniques as the contemporary approaches to risk management. These are operations research and statistics. They know that these two concepts are very detailed and sophisticated tools, which require software for better results. The banks have been investing in these solutions, and they are designing new organizations to handle these issues. Thus, the authors introduce these techniques very briefly with using some banking practices for better understanding.

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