A COMPARATIVE STUDY OF CREDIT RISK MANAGEMENT IN PUBLIC AND PRIVATE SECTOR BANK (WITH SPECIAL REFERENCE TO MUDRA YOJANA)
Dr Keshav Shyam
Department of Commerce & Business Administration
University of Allahabad
Abstract
Government of India (GoI) launches various financing schemes for promoting Medium and Small Enterprises (MSMEs). One such scheme is MUDRA Yojana and loan under this Yojana is called MUDRA loan. This Yojana is performing well as amount of loan sanctioned in it rising year by year. But the matter of concern is along with it the NPA of bank relating to this scheme is continuously rising. The NPA of public sector bank is more in comparison of private sector bank in context to this Yojana. So, in this paper a comparative study of public and private sector banks on different parameters such as credit appraisal, monitoring and credit risk management in respect of MUDRA Yojana has been done. It is an analytical research based on primary data. In order to find out significance level factor analysis has been applied. The result of study shows that there is no considerable difference between above stated parameters among the sampled sectors bank.
Keywords: MUDRA Yojana, credit appraisal, monitoring and credit risk management. Introduction Banks are financial institution which deals with mainly two functions first accepting deposit and secondly lending money i.e. granting loan. The function of granting loan is most crucial function of banks as it involves risk. Risk of nonpayment of loan called as credit risk and managing this risk is called credit risk management. Banks grant loans for various purposes either on individual demand or under government schemes. On individual demand bank faces less credit risk as they can deny granting of loan if they found that loan is uncovered by guarantee or if bank’s grant loans then on its own favorable term and condition but in case of government sanctioned schemes banks are bound to issue loan on the features or conditions government has launched. The features or conditions of government schemes are public favorable rather than banks favorable. One such government scheme is MUDRA Yojana launched in April 8, 2015 with the purpose of financing micro small and medium enterprises so that income as well as employment can be generated. In this Yojana MUDRA loan is given under 3 categories
