The role of credit risk management in mitigating NPA

( Vol-11,Issue-4,July - August 2025 )

Author(s): Umamaheswararao Gobbilla, Chippa Nandini

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Page No: 167-177
DOI: 10.22161/ijaems.114.19

Keywords:

Credit Risk Management, Non-Performing Assets (NPA), Credit Evaluation, NPA Mitigation, Risk-Based Lending, Recovery Mechanisms.

Abstract:

This study investigates the impact of credit risk management practices on non-performing assets (NPAs) in Axis Bank over a five-year period. Employing a descriptive and analytical approach, it analyzes secondary data from annual reports, financial statements, and industry sources, utilizing trend analysis, ratio analysis, correlation, and ANOVA to evaluate asset quality and risk mitigation strategies. Findings reveal a significant decline in gross and net NPAs, alongside an increase in provisioning coverage and stable capital adequacy ratios, indicating effective credit risk controls. The results demonstrate a strong inverse relationship between NPAs and provisioning, and consistent asset quality management across quarters. These insights underscore the importance of robust internal credit frameworks and technological tools in reducing NPAs, thereby enhancing financial stability. The study highlights that effective credit risk management is vital for sustaining bank profitability and systemic resilience in the evolving Indian banking landscape.

Received: 18 Jun 2025; Received in revised form: 10 Jul 2025; Accepted: 13 Jul 2025; Available online: 16 Jul 2025

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