Credit risk is part of everyday banking business face by all banks and its effect banking performance and influence future operations. Recently credit risk gained importance due to prolonged financial crisis that has leaded both financial and non-financial institution in turmoil. The practices of credit risk management are new to Indian banking sector compare to other banks around the world. As Indian banking sector has been center of attention among developing nations due fast emerging Indian economy. Therefore this study explains credit risk under of framework of Basel Committee on capital adequacy. The globalization has increased fragility in Indian banks suffering from high level of NPA and Low capital adequacy. The empirical aim shows credit risk management significant effect on Indian banking sector. Therefore it’s key to practice credit risks management under efficient and reliable framework to reduce or eliminate external and internal risk.
The motivation behind research to identify model, approach, assess credit risk management in Indian banking sector. Secondly evaluating Indian banking sector under supervision of Basel of capital Accord (Basel I, Basel II, Basel III). Finally, examine relationship between ROA (performance) and NPL (Non-performing Loans) ratios and Capital adequacy ratios for Indian banking sector.
