Role of Risk Management in NPA Management
Banks play a critical role in the economy of any country as they are the financial intermediaries. They are the financial institutions that are exposed to a variety of risks while fulfilling the financial needs of their customers. Along with many other risks, one important risk is having an account in the status of NPA or Non-Performing Assets. When a bank faces a credit risk, its financial position gets hampered. When the NPA percentage of a bank increases beyond a certain level, the financial health of the bank deteriorates. According to the FSR or Financial Stability Report of RBI, risks to the banking sector go to higher levels and remain there. Thus, overall asset quality deteriorates. Therefore, it is all the more mandatory and critical for a bank to have a diligent and efficient risk management system. It should tackle the risks in a lucid manner. It becomes a part of the overall npa management strategy followed by it. When we think about risk management, it has a close r...