Abstract
The banking sector at present is facing many issues; one among them is credit risk. Credit risk is termed as an estimate or forecast of the default of a borrower failing to recover his interest amount or borrowed amount. Currently, the banker or the lender is at risk of recovering the interest amount and principal amount, increasing their recovery costs. The present study makes an attempt to know the awareness of customers towards credit risk of private sector banks. The research objective is to analyze the significant association between client company’s perceptions with a view to credit risk. The study explains the major variation between client company’s perspectives towards Indian private sector. The study explains about the impact of credit risk on banks profitability. The present study helps banks to prevail over the problem of credit risk. The study analysis the objectives of research, hypothesis formulated, research methodology, findings and conclusions are discussed. The secondary sources for the study are through the websites of banks, Journals and client company’s websites. Primary data has been gathered from 285 client companies using convenience random sampling technique from private sector banks.
Highlights
Credit risk is measured as a major problem in banking sector
Credit risk of private sector banks can be slowly but surely decreased by following few suggestions mentioned in this paper resembling improving internal rating from banks and external rating from credit rating agencies
It assists the client companies to sustain in his business environment. As these recommendations are constructed on the perception of Client companies, there may be probably other factors which are responsible for increase of credit risk
Summary
Credit risk is measured as a major problem in banking sector. The factors responsible for credit risk may be financial factors, Business related factors, Government intervention and Policies of the banks etc. To decrease the non-performing assets we need to plan in advance on issuing of requested amount to the https://www.cribfb.com/journal/index.php/ijfb clients. Before issuing the loans to the customers, banks necessitate to analyze the financial background and their credit worthiness. This may help in identifying the borrowers who will settle up the borrowed sum and who defaults it
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